Crude oil drops as US inches towards Iran deal to reopen Strait of Hormuz

The strait – which links the region to world markets – has been subject to a double blockade, with curbs imposed by both Iran and the US

Oil dropped at the week’s open as the US and Iran edged towards a deal, although US President Donald Trump said Washington’s blockade of the Strait of Hormuz would remain until an agreement was completed.

Global crude benchmark Brent fell as much as 4.2 per cent to US$99.16 a barrel, after declining more than 5 per cent last week, while West Texas Intermediate was near US$92. Trump said in social-media posts he would not “rush” into a deal, which “isn’t even fully negotiated yet”.

Any final approval of an agreement by both sides may take several days, according to senior US officials.

Still, it remains unclear how key differences, including the fate of the Islamic Republic’s nuclear programme and Tehran’s calls for sanctions relief, will be addressed in any potential deal.

Iran’s semi-official Tasnim news agency said the draft agreement could still collapse because the US was obstructing some key clauses, including Iran’s demand that its assets be unfrozen.

Global energy markets have been upended by the crisis, which began in February when the US and Israel attacked Iran.

The conflict spread rapidly across the Persian Gulf region, damaging oil-and-gas infrastructure and forcing regional producers to shut in millions of barrels of daily crude supplies.