Sathya Nasrallah
LONDON, May 6 (Reuters) – Oil prices extended losses on Wednesday, falling to a two-week low after Pakistani sources said the United States and Iran were close to a preliminary peace deal.
Brent crude futures fell $10.07, or 9.2%, to $99.80 a barrel by 1042 GMT, falling below $100 for the first time since April 22. U.S. West Texas Intermediate crude oil fell $10.79, or 10.6%, to $91.48.
Both benchmarks were on track for their biggest absolute one-day losses in a month and hit two-week lows, having fallen about 4% in the previous session.
The United States and Iran are close to agreeing on a one-page memorandum of understanding, a source in the Pakistani mediator said.
US media Axios reported that the United States expects Iran to respond on several key issues within the next 48 hours, citing sources as saying this is the closest the two sides have come to an agreement since the war began.
Iran had earlier said it would only accept a fair and comprehensive deal.
The U.S. military said on Monday it destroyed several Iranian small boats as part of efforts to help stranded ships leave the Strait of Hormuz.
The loss of crude supplies due to disruptions to maritime traffic in the Strait since the war broke out in February has pushed up prices, with Brent crude trading at its highest level since March 2022 last week.
The closure of the Strait of Hormuz has caused global oil and fuel inventories to fall as refiners try to make up for production shortfalls.
U.S. crude oil inventories fell for a third straight week, while gasoline and distillate inventories also fell, market sources said on Tuesday, citing data from the American Petroleum Institute.
Crude oil inventories fell by 8.1 million barrels in the week ended May 1, sources said. Gasoline inventories fell by 6.1 million barrels from a week ago, while distillate stocks fell by 4.6 million barrels, sources said.
Official data from the US Department of Energy’s statistical arm EIA will be released at 1430 GMT.
(Reporting by Shadia Nasralla; additional reporting by Helen Clark in Melbourne and Jeslyn Lerh in Singapore; Editing by David Goodman)
