WASHINGTON (dpa-AFX) - Crude oil prices have plunged on Friday as the prospects of an end to hostilities in the gulf appear brighter even as the Strait of Hormuz remains closed, continuing to disrupt crude oil supply.
WTI Crude Oil for June month delivery was last seen trading down by $3.28 (or 3.28%) at $101.79 per barrel.
The war between the U.S. and Iran, which began on February 28, (now in an extended ceasefire phase), is now in its third month.
Since the beginning of the war, which the U.S. started to curb Iran's nuclear ambitions, Iran has effectively closed the Strait of Hormuz through which nearly 20% of the oil and energy transit took place.
Last week, after cancelling the second round of peace talks with Iran, U.S. President Donald Trump announced that Iran can call the U.S. with any peace plan and remarked that there was no need for direct talks.
Despite ordering a two-week ceasefire on April 7 and then extending it indefinitely on April 22, Trump ordered a naval blockade on all ships entering or exiting Iran's ports.
Trump refused to lift the blockade until Iran agrees to wind up its nuclear programs. Iran, on its part, refused to reopen the Strait of Hormuz until the U.S. withdraws its naval blockade.
This standoff pushed oil prices higher and higher due to the resultant supply disruption, which continues to push inflationary concerns, compelling major banks across the world to wind up any lowering of interest rates, including the U.S. Federal Reserve.
Earlier on Monday, Trump declined a draft plan from Iran that sought to put off discussions on Iran's nuclear plans to a later date.
On Wednesday, Trump urged Iran to get its act together and come up with a peace proposal soon.
Trump also posted an image of himself carrying a gun with a caption reading 'No More Mr. Nice Guy' indicating that the U.S. was unwilling to compromise on its demands.
Reports indicated that U.S. Central Command briefed Trump about its readiness to begin a new wave of strikes on Iran, if needed, to seize control of the Strait of Hormuz from Iran.
Iran threatened strong retaliatory attacks. Iran's incumbent Supreme Leader Mojtaba Khamenei released a message affirming Iran will not give up its hold on the Hormuz strait and would not wind up its nuclear plans.
While the mutual verbal rhetoric between the U.S. and Iran continued, oil prices kept moving higher and higher.
Today, Iran's IRNA state-run news agency reported that Iran had sent a fresh proposal for negotiations through Pakistani mediators.
Investors cheered this development, which signaled a positivity amid ongoing escalation, and consequently, oil prices sharply plunged.
Recently, the International Energy Agency stated that the world is losing around 13-million-barrels of oil per day since the Strait of Hormuz was effectively shut.
Energy experts want a speedy resolution to the war as they warn that even if the strait reopens in the coming days, the comprehensive output could remain below pre-war levels throughout this year due to production delays as resumption of operation could not take place quickly from damaged wells.
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