WASHINGTON (dpa-AFX) - Crude oil has surged on Tuesday as market participants found that U.S. President Donald Trump's announcement of U.S.-Iran peace talks was not officially substantiated by Iran. Yesterday, oil prices slumped after Trump's message triggered confidence that the war would soon end.
WTI Crude Oil for May delivery was last seen trading up by $3.90 (or 4.43%) at $92.03 per barrel.
The gulf war entered day number twenty-five today.
Over the past week, oil prices skyrocketed after the Middle East conflict saw a deeper escalation. Israel attacked Iran's South Pars gas, field crippling its main source of energy supply.
In retaliation, Iran targeted Israel as well as Arab neighbors hosting U.S. bases. In particular, Iran struck Qatar's largest Liquified Natural Gas plant in Ras Laffan after which Qatar officially announced that its repair would take longer and a resumption of operation may happen only after a year.
Iran also attacked the Mina al-Ahmadi refinery in Kuwait, disrupting its production.
As the Strait of Hormuz has remained blocked since the start of the war on February 28, oil tankers are stranded across the gulf neighborhood, unable to reach their destinations.
Eventually, oil prices surged due to demand as well as supply concerns after several Arab countries scaled down operations and some wound up production.
Yesterday, Trump announced that over the weekend, the U.S. and Iran had 'very good and productive talks' directed to bring an end to the hostilities.
In addition, Trump stated that he ordered the Department of Defense to postpone any planned military strikes against Iran's power plants and energy infrastructure for a five-day period.
The news gave a breather to markets and oil prices plunged sharply.
However, after Iran's semi-official news agency Mehr denied any ongoing U.S.-Iran talks, Iranian officials rejected claims of negotiations.
Iran's Deputy Speaker Ali Nikzad stated that the Strait of Hormuz would not return to normal operations and ruled out any talks with the U.S.
Meanwhile, a report by Wall Street Journal stated that Saudi Arabia and the United Arab Emirates are getting closer to joining the fight as gulf nations are concerned with Iran's attempt to tighten its grip over the Strait of Hormuz.
Today, Axios reported that that the U.S. and Iran could sit down for negotiations in Islamabad, Pakistan, to carry on peace talks with the U.S. Vice President JD Vance as a probable chief negotiator. Investors received this news with caution as neither the U.S. nor Iran officially confirmed this.
Experts are concerned that crude oil prices could hit around $150 per barrel if the strait remains shut through next month-end.
The International Energy Agency has already announced that its member-nations will release nearly 400 million barrels from their respective strategic reserves.
Inflationary pressures have forced the U.S. Federal Reserve as well as other major central banks across the world to rein in interest rates at the current level.
As a result, the U.S. dollar is expected to strengthen further. The U.S. Dollar Index was last seen trading up by 0.34 points (or 0.34%) at 99.51.
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