Oil prices fall below $100 a barrel on hopes of Iran peace deal

Oil prices fell sharply on hopes of a US-Iran peace deal, with Brent down 5.5% to just below $98/bbl, the weakest in two weeks. The risk-off-to-risk-on swing also knocked inflation expectations lower and helped treasury futures rally, with the article noting that gold climbed alongside equities as markets priced in a possible reopening of the Strait of Hormuz. The move comes despite lingering uncertainty over key issues, including Iran’s blockade of Hormuz. ING’s Warren Patterson cautioned that markets have been here before and talks could still break down, suggesting the reaction may be premature. Stephen Innes said the market was unwinding a build-up of inflation fear and hawkish rate pricing that had been embedded after the recent energy shock. For precious metals, the key takeaway is that easing oil-driven inflation pressure and a softer dollar are near-term supportive for gold via lower real-rate expectations. Near-term risk is that any collapse in talks or renewed disruption in Hormuz quickly reverses the move, reviving inflation fears and potentially pressuring gold if yields and the dollar rebound.