Oil slumps nearly 8%, Brent closes above $101

Oil drilling rigs

Oil prices fell sharply at the close of trading today, May 6, driven by growing optimism about the possibility of ending the war in the Middle East, after US President Donald Trump indicated that the United States and Iran were close to reaching a peace agreement.

Brent crude futures for July delivery fell 7.83%, or $8.60, to $101.27 a barrel. West Texas Intermediate (WTI) crude futures for June delivery dropped 7%, or $7.19, to $95.08 a barrel.

Brent crude fell below $100 a barrel during the session after reports that Washington and Tehran were close to reaching an agreement on a one-page memorandum of understanding, while Iran confirmed it was studying a new US proposal and would soon convey its response via Pakistan.

However, oil reduced its losses after Trump said it was too early to consider direct talks with Tehran, but he expressed great optimism about the possibility of reaching an agreement before his scheduled visit to China next week.

Oil prices received partial support from data showing that crude inventories in the US fell by 2.3 million barrels last week, in line with expectations, coinciding with a decline in gasoline and distillate inventories.