Global crude oil prices tumbled sharply in early Asian trading. West Texas Intermediate crude fell over six percent today. Brent crude also dropped significantly below 100 dollars per barrel. Murban crude dropped even more sharply by nine percent.

Optimism Drives the Market

Investors feel highly optimistic about ongoing United States and Iran negotiations. A potential peace agreement would restore flows through the Strait of Hormuz. The vital shipping chokepoint normally carries one fifth of global oil supplies.

Markets previously priced in massive disruptions from the ongoing conflict. Prices spiked wildly when the naval blockade trapped Iranian oil exports. Recent diplomatic signals successfully removed this heavy war risk premium.

Bouncing Back Slightly

Prices rebounded slightly later in the day following new military action. US forces struck several Iranian missile sites in a surprise attack. This sudden military escalation dampened hopes of an imminent ceasefire deal.

Trading activity remained lighter than usual due to major public holidays. Analysts note that reopening the strait fully will take significant time. Full supply recovery will likely extend over several months.

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