Oil Prices Drop After Reports of Mediation Efforts Between the U.S. and Iran

SadaNews Economy - Oil prices fell during trading today, Tuesday, July 21, as the markets balanced reports of mediation efforts between the U.S. and Iran on one side, and the exchange of new attacks between the two sides, along with the Houthis in Yemen threatening to impose a maritime blockade on Saudi Arabia on the other.

In terms of trading, Brent crude futures fell by about 0.8% to $88.51 per barrel, while U.S. crude contracts declined by 0.9% to $82.50 per barrel.

A statement issued by the Saudi Foreign Ministry confirmed the kingdom's condemnation of the accusations made by the Houthi military spokesman, which alleged that the kingdom is blockading the Yemeni people and prohibiting maritime navigation around the kingdom.

Market analyst Tim Waterer at KCM Trade said in a note quoted by Reuters: "The Houthi threats to impose a maritime blockade on Saudi Arabia are significant as they increase the risks of disrupting supplies from another major oil exporting country."

On the other hand, a senior Iranian official told Reuters that Tehran received a proposal from mediators for a 10-day ceasefire in an attempt to salvage a temporary agreement that was signed on June 17, aimed at paving the way for a permanent agreement to end the war that began on February 28.

These diplomatic efforts came in the wake of U.S. strikes on Iranian cities last night and attacks launched by Iran on U.S. military assets across the region.

The U.S. Central Command announced late yesterday that it had begun another round of strikes on Iran.

Goldman Sachs predicted that the price of Brent crude would exceed $120 per barrel in the last quarter of this year, averaging $100 per barrel next year, if supply disruptions through the Strait of Hormuz continue and Gulf States’ production does not fully recover until the end of 2027.