Crude oil prices dropped below $80 as world waits

Nearly 3 days before the U.S. and Iran are to finalize their peace deal, crude oil prices dropped below $80 a barrel and fell more than 4% in Tuesday’s trading.

It was the first time since early March when the global oil benchmark sank below $80 as Brent crude futures expiring in August shed 4.1% or more than $3.60 a barrel to close at $79.79 a barrel. It was a level last seen after the start of the U.S. and Israeli attacks on Iran in late February.

West Texas Intermediate crude, the U.S. benchmark, fell more than $4 or 4.6% to $77.04 a barrel on the New York Mercantile Exchange. At one point, WTI dropped $4.07 or 5.04%.

Both benchmarks tumbled nearly 5% on Monday after the U.S. and Iran announced a preliminary deal that would extend a ceasefire by another 60 days and unblock the Strait of Hormuz.

Washington and Tehran are set to meet in Switzerland on Friday for a formal signing of what is being called a memorandum of understanding (MoU) between the warring sides. President Donald Trump said the Strait of Hormuz, which has been effectively shuttered since the start of the conflict at the end of February, would be “completely opened” on Friday, while suggesting that it was already “partially opened.”

If the Strait of Hormuz opens to tanker shipping on Friday as promised, it doesn’t mean a quick return of oil and gas trade to previous levels. The announcement is the first step and it could actually take months for oil and gas shipments in the region to return to the levels they were before the start of the war.

There is however, some debate over just how much oil was shut in during the war. Middle Eastern producers reportedly said it was mor than 10 million barrels a day of oil production lost when the Strait was closed. Now, Reuters quotes “sources at two major trading companies” as indicating the actual supply losses as of June might be closer to 5 to 6 million barrels of oil daily. Producing nations found ways around the Hormuz closure and President Trump contends the Navy secretly helped ship 100 million barrels out of Hormuz.

Natural gas prices managed an increase on Tuesday, settling at $3.261 MMBtu with a gain of $0.114 or 3.62%.

Tuesday was a day for losses for nearly all of our Oklahoma energy stocks. Only Gulfport Energy Corp. reported a gain of more than 2%. USA Rare Earth dropped the most at approaching 6% while the remaining companies had losses of 2% or less.