Oil prices fell as much as 3 per cent by Thursday afternoon after President Donald Trump said the US was close to reaching a nuclear accord with Iran.
The price of Brent crude, the global benchmark, was trading at $64.6 per barrel by mid-afternoon, while West Texas Intermediate Crude stood at $61.7 per barrel.
Trump told reporters in Doha, Qatar, which forms part of a three-day Middle East tour, that the US was ‘getting close to having a deal’ that would avoid a ‘violent step’.
During his first term in office, Trump withdrew the US from an agreement severely limiting Iran’s ability to enrich uranium and slashing its nuclear fuel stockpiles.
The US instead imposed major sanctions as part of a ‘maximum pressure’ campaign aimed at restricting Iran’s support for armed groups in the Middle East and curtailing its ballistic missile programme.
A new deal could see significant sanctions lifted on Iranian energy exports, flooding the international oil market with even greater supply.
Near: President Donald Trump said the US was close to reaching a nuclear accord with Iran
OPEC+ member countries announced plans earlier this month to boost oil production in June by 411,000 barrels per day, taking the combined increases for April, May and June to 960,000 bpd.
And just yesterday, the US Energy Administration revealed that US crude inventories surprisingly increased by 3.5 million barrels last week.
This sparked a drop in oil prices, which had surged early this week after the US and China revealed they would cut their reciprocal tariffs on each other for 90 days.
Trump’s remarks badly hit shares in oil supermajors, with BP and Shell falling 3.9 per cent and 2.1 per cent, respectively, while mid-cap firm Harbour Energy had a 1.8 per cent decline.
The overall UK markets have performed comparatively better today than the oil giants, although the FTSE 100 was just 0.2 per cent up at 8,595.8 points by 3pm and the FTSE 250 was flat at 20,816.1 points.
However, Asian markets suffered from much weaker sentiment, with Hong Kong’s Hang Seng index closing 0.8 per cent lower at 23,453.2, Seoul’s KOSPI 0.7 per cent down at 23,453 and Japan’s Nikkei 225 index dropping 1 per cent to 37,775.51.
And in Europe, France’s CAC 40 was down 0.2 per cent, or 17.5 points, at 7,819.3, while Germany’s DAX had flatlined at 23,553.
Chris Beauchamp, chief market analyst at IG, said: ‘The euphoria from Monday’s US-China truce has faded, and now markets are waiting to see if further deals materialise from here.’
Having already struck a trade deal with the UK, Trump has now claimed India offered to remove all tariffs on imported US goods.
He made the comments in Qatar whilst referencing Apple’s intentions to manufacture the majority of iPhones in India instead of China.
Many large companies have been scaling back their forecasts in response to the unpredictability resulting from Trump’s tariff policies.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
InvestEngine
InvestEngine
Account and trading fee-free ETF investing
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Read More: Oil prices fall as Trump says US is ‘getting close’ to Iran nuclear deal