Brent falls 8% as Iran proposes two-day plan to reopen Hormuz
Brent fell 8.12% to $104.22 as Iran floated a plan to reopen Hormuz, while Qatari officials negotiate the release of more than $6bn in Iranian assets.
Oil prices fell more than 8% at the close on Monday after Iran said contacts with the United States to end an eight-month war were continuing, and told Qatari mediators about a two-day plan to reopen the Strait of Hormuz. Over the weekend, Qatari officials tried to negotiate the release of more than $6bn of Iranian assets so that Tehran might allow the strait to reopen. Brent crude fell more than 6.5% to $105.55 a barrel, its lowest since 16 October, before extending losses to $104.22 by 17:52 GMT, a drop of 8.12%. West Texas Intermediate fell 7.70% to $96.10.
Iran's foreign ministry said Tehran had presented the plan to the mediators. IRNA quoted Foreign Minister Abbas Araghchi as saying that "consultations through the mediators are very intense, we have presented our conditions and proposals, and everything depends on Washington's political rationality." The strait has remained largely closed since the US and Israeli attack on Iran earlier this year. Reports said Supreme Leader Mojtaba Khamenei had granted the government "powers" in talks with the United States.
The drop in oil lifted airline shares, with IAG, the owner of British Airways, up 4.2% in London and United Airlines up 7% in New York. Government borrowing costs fell, with the yield on ten-year British government bonds down 10 basis points to its lowest level since 22 September.
Chris Beauchamp, chief market analyst at IG, said: "The news is a lifeline for equity markets that have felt increasing pressure from rising oil, but there is always a risk that Trump tries one last throw after the midterm elections."
What do these terms mean?
Brent crude: A type of crude oil used as a benchmark for pricing about two thirds of the world's oil, most of it produced in the North Sea.
West Texas Intermediate (WTI): The US benchmark crude, traded on the New York exchange and used as a gauge of US oil prices.
Basis point: A small unit for measuring changes in interest rates or bond yields, where 100 basis points equal 1%.
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