Oil prices dropped on Sunday after President Donald Trump said an agreement with Iran had been reached and the United States would end its naval blockade on the country.
Brent crude prices on Sunday fell 3.9% to about $84 a barrel, and US crude dropped 4.8% to about $81 a barrel. If oil settles at that level, it will be the lowest price for crude since March 4, just a few days into the war.
Anticipating a deal framework to be reached this weekend, oil settled below $90 a barrel on Friday for the first time since the first week of the war. Still, it has a long way to go to get back under $70, where it was before the United States and Israel launched attacks on Iran in late February.
Markets have cheered apparent progress, but the oil market still has significant work ahead to return the flow of crude to normal. The Strait of Hormuz needs to be de-mined, ships need to be able to freely flow in and out of the strait, Middle East production needs to come back online, emergency petroleum reserves need to be refilled, and damaged energy facilities need to be repaired.
Oil analysts widely believe oil prices will remain elevated for quite some time. Even though prices may fall initially, they’re widely expected to bounce back once demand rises again — and particularly when emergency stockpiles get refilled.
