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Oil Prices Plunge as US‑Iran Talks Resurface and Yen Gains on Coordinated Intervention
Oil markets slid sharply on Monday after the United States announced new diplomatic talks with Iran aimed at ending hostilities in the Middle East and reopening the Strait of Hormuz. At the same time, the Japanese yen rose after a joint intervention by U.S. and Japanese authorities to support the currency. The moves reflect renewed geopolitical uncertainty and a widening yield gap between U.S. Treasuries and Japanese bonds.
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Oil Prices Drop Sharply
By 06:30 GMT, Brent crude for September delivery fell 5.42 % to $83.18 per barrel, while West Texas Intermediate (WTI) slipped 6.20 % to $79.42. The steep declines came after U.S. President Donald Trump announced that fresh diplomatic talks with Tehran would begin on Monday.
US‑Iran Negotiations Resume
Trump said Washington will pause any new strikes against Iran provided a rapid agreement is reached, especially regarding the reopening of the strategic Strait of Hormuz. Iran also reported progress on a separate deal with Oman to ensure safe passage for global hydrocarbon shipments.
Since early July, Tehran has re‑locked the strait following renewed clashes with U.S. forces, underscoring the fragility of the situation. Although a mid‑June protocol was signed, previous attempts at a breakthrough have not materialised, so markets remain cautious.
Yen Strengthens After Coordinated Intervention
At the same timestamp, the Japanese yen rose 0.5 % against the dollar to ¥156.58, its highest level since early May. The appreciation follows a coordinated move by U.S. and Japanese authorities to buy yen in the spot market.
Japan’s Finance Minister Satsuki Katayama warned that further joint action could be taken if excessive volatility re‑emerges. In July, the yen had fallen to ¥163.24 – its weakest since December 1986 – pressured by the widening interest‑rate differential between the Federal Reserve and the Bank of Japan, as well as concerns over Japan’s fiscal policy.
Analysts note that the yield gap continues to favour the dollar and fuel “carry‑trade” strategies, where investors borrow in low‑yielding yen to invest in higher‑yielding assets.
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