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Oil prices slipped back below $80 a barrel on Thursday on hopes that the Strait of Hormuz would reopen after Iran indicated progress in talks with Oman, easing concerns over supply disruptions.
Brent, the benchmark for two-thirds of the world’s oil trading 0.45 per cent lower at $79.07 a barrel at 8.23am UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 0.66 per cent to $74.72 a barrel.
Iranian Foreign Ministry spokesman Esmaeil Baghaei said on Wednesday that Iran and Oman are in the final stages of drafting an agreement on a proposed safe shipping route through the Strait of Hormuz after two months of negotiations.
Gold, meanwhile, climbed to a seven-week high as investors continue to seek the safety of the precious metal despite the Iran war-driven volatility in markets and on growing hopes over the strait reopening.
Spot gold was up 0.5 per cent at $4,265.22 per ounce on Thursday morning, after hitting its highest level since June 18. On Wednesday, bullion posted its biggest daily gain since February.
Spot gold has declined 19 per cent since the onset of the Iran war on February 28, due to fears of energy-driven inflation pushing interest rates higher.
“The sharp rally came on building optimism that a diplomatic breakthrough in the Middle East is close to being finalised,” IG market analyst Tony Sycamore was quoted by Bloomberg as saying. “This in turn would keep downside pressure on oil prices and reduce the need for central banks to raise rates, providing a clear tailwind for gold.”
A sustained break above the 200-day moving average could pave the way for a stronger recovery towards the $5,000 mark, he added.