Oil plunges as US halts bombing campaign against Iran
Brent crude’s price saw a sharp decline after Washington temporarily halted its strikes on Iran.
IMAGE: Flags of Iran and the US. Getty Images
The decline in oil prices follow two weeks of major US-Iran escalation that sent Brent crude soaring above the $100/bbl threshold.
Washington will temporarily halt its military campaign against Iran, US Ambassador to the United Nations Mike Waltz said in an interview with CBS News.
The pause is expected to give “diplomacy some space”, Waltz said, adding that military assets were still deployed in the region, should diplomacy fail.
Tehran will pause attacks on neighbouring Gulf nations for the time being. However, it will match “attack for attack”, suggesting it will resume attacks if the US does the same, Reuters reported, citing an unnamed Iranian source.
Meanwhile, Oman is pursuing a Hormuz corridor deal for the safe passage of commercial vessels, according to media reports. Iran foreign ministry spokesperson Esmaeil Baqaei said the talks were “constructive”, the Financial Times reported.
US naval blockade still in place
Despite recent progress, the US naval blockade against Iran remains in full effect, US Central Command (CENTCOM) said on social media platform X.
On Saturday, US forces disabled a second vessel in the Gulf of Oman, after its crew allegedly attempted to violate the blockade, it said. The Mozambique-flagged M/T Lavine is no longer transiting to Iran.
As of last week, the US CENTCOM has redirected 12 commercial vessels in the region, disabled two that didn't comply, and boarded two to ensure total compliance.
Barring a long-term agreement, commercial tankers will continue facing these operational issues that drove oil prices through the roof over the past two weeks.
Even though some short-term risk has faded, getting maritime traffic back to normal across the Strait of Hormuz and the Red Sea is a process that will demand time and renewed confidence.
“We’re unlikely to see any recovery until there’s clarity on whether this de-escalation is more permanent and whether vessels can navigate the strait without fear of attack,” two analysts from ING Bank noted.
By Aparupa Mazumder
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