Oil prices were sent crashing on Wednesday afternoon after a Politico report that US Senator Rand Paul may soon sit down at the negotiating table with Iranian Foreign Minister Javad Zarif in an effort to smooth heightened tensions between the two nations.
Rand offered to serve as a liaison between the two feuding nations over a round of golf over the weekend with US President Donald Trump. Trump agreed to Paul’s proposal, Politico reported, despite Trump’s rather hard line against Iran that has squeezed the country’s oil revenues through restricting its exports. Paul would naturally be expected to take a softer line on US foreign interventions.
By 4pm EST, oil prices had sunk more than 1 percent, with WTI falling $0.99 to reach $56.63, and Brent falling $0.71 to reach $63.64, as the oil markets fear a resolution—even if just in part—to the tensions in the Middle East.
Oil prices have been particularly unstable this week, falling yesterday when US Secretary of State Mike Pompeo suggested that Iran was ready to sit at the negotiating table over the nuclear deal, then rising again as Iran emphatically denied the report.
Around 10am today, WTI was trading at almost $58 per barrel.
Tensions have escalated in recent weeks with numerous oil-related incidents near the Strait of Hormuz, including oil tanker attacks off the coast of Oman, a seized Iranian oil tanker in Gibraltar, and the most recent incident of another small tanker that went missing over the weekend near Iranian waters. The United States suspected that Iran hijacked the vessel, which Iran denied.
Iranian Foreign Minister Zarif is in New York this week for UN meetings, so a meeting would be convenient, although one has not been confirmed.