Oil prices fell sharply on Monday, extending losses from the previous week, as traders weighed the potential for a ceasefire between the US and Iran that could lead to increased crude supply. Brent crude, the international benchmark, dropped by over 3% to below $80 a barrel, while US West Texas Intermediate (WTI) fell to around $76 a barrel.
Ceasefire hopes drive supply expectations
The decline in oil prices came after reports that the US and Iran have made progress in indirect talks mediated by Oman, raising hopes of a deal that would ease sanctions on Iranian oil exports. Analysts estimate that Iran could add up to 1.5 million barrels per day of crude to global markets if sanctions are lifted, which would help offset supply cuts from OPEC+.
"The market is pricing in a higher probability of Iranian oil returning to the market," said Giovanni Staunovo, an analyst at UBS. "Any ceasefire agreement would be a game-changer for oil supply dynamics."
AstraZeneca profit rises on strong drug sales
In corporate news, AstraZeneca reported a 12% rise in second-quarter profit, beating analyst expectations, driven by strong sales of its cancer drugs and respiratory treatments. The Anglo-Swedish drugmaker posted core earnings per share of $2.15, up from $1.92 a year earlier, while revenue increased 9% to $12.7 billion.
"AstraZeneca's performance continues to be robust, with our oncology portfolio delivering double-digit growth," said CEO Pascal Soriot in a statement. The company also raised its full-year revenue guidance, now expecting a low double-digit percentage increase, up from a previous forecast of high single-digit growth.
Market reactions and broader economic impact
The oil price drop weighed on energy stocks, with the FTSE 100's oil and gas sector falling 1.5%. However, the broader market was mixed, with the FTSE 100 index edging up 0.1% as gains in healthcare and consumer stocks offset energy losses. Investors also focused on central bank decisions this week, with the Federal Reserve and the Bank of England expected to raise interest rates by 25 basis points each.
The potential resumption of Iranian oil exports comes at a time when the global economy is showing signs of slowing, particularly in China, the world's largest oil importer. Weak manufacturing data from China has added to demand concerns, keeping oil prices under pressure.
