WTI declines below $88.50 on US-Iran ceasefire optimism

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $88.20 during the early European trading hours on Thursday. The WTI price declines amid optimism over the ceasefire between the US and Iran.  

The US and Iran have been in indirect talks aimed at extending the two-week ceasefire beyond its expiry on April 22. US President Donald Trump said the U.S.-Israeli war on Iran was "close to over," while the White House said more in-person talks would likely take place in Pakistan again. Hopes of more peace talks between the two countries ease concerns about further disruptions to energy supplies, dragging the WTI price lower. 

“Resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies, prices and the global economy,” the IEA said in a report published Tuesday.

Oil traders are also weighing how the US blockade will affect global energy supplies. The US blockade targeting Iranian ports could further pressure remaining flows, with Washington reporting that several vessels had already turned back in the first 24 hours, even as transit via non-Iranian ports continues.