Oil Prices Drop 5.35% After US-Iran Deal
A US-Iran deal to end the war sent oil prices falling on Friday, with July delivery WTI crude shedding 2.5% to reach $85.47 a barrel.
- US-Iran deal to end war sends oil prices falling
- July WTI crude down 2.5% to $85.47 a barrel
- August Brent contract settled 2.2% lower at $88.40 a barrel
- Experts say relief won't come fast for food prices
- UN World Food Programme estimates 45 million more people may face acute hunger
A US-Iran deal to end the war sent oil prices falling on Friday, with July delivery WTI crude shedding 2.5% to reach $85.47 a barrel.
The August Brent contract settled 2.2% lower at $88.40 a barrel.
Officials said the deal's success will determine the extent of these effects on oil prices and the cost of food.
Meanwhile, sources confirmed that the entire food supply chain is heavily influenced by energy prices, with energy being a big portion of the retail food dollar.
Impact on Food Prices and Energy Costs
Experts said that higher energy prices will likely put upward pressure on global food prices.
According to the UN World Food Programme, the number of people facing acute hunger could increase by 45 million if the war lasts beyond June 2026.
Tom Seng, who teaches energy finance at TCU, said relief won't come fast for oil prices and gasoline prices.
In contrast, government sources said that the Canadian government has introduced measures such as suspending federal taxes on fuels and implementing food subsidies to buffer the war's impacts on farmers and consumers.
Despite this, witnesses said that the increased costs come at a time when farmers around the world are already facing lower prices for grains, oilseeds, and other field crops.
Reactions to the US-Iran Deal
The Iranian community is welcoming the deal, with many hoping that it will bring relief to their families and friends affected by the war.
However, some experts are cautious, saying that the deal's success is not guaranteed and that many factors can still affect oil prices and food prices.
Meanwhile, sources confirmed that Canadian oil producers have seen high profits as global buyers look for alternative sources of oil.
In response to the crises, the Canadian government has revised down its 2026 growth forecast, with fears of a prolonged energy crisis.
Despite this, officials said that the deal is a positive step towards reducing tensions and promoting stability in the region.
Context and Historical Facts
The war between the US and Iran has significantly impacted Canada's economy, driving up energy prices and elevating inflation.
Rising oil prices have increased transportation and input costs, placing upward pressure on food prices.
Historically, the correlation between energy prices and food prices has been strong, with a sustained conflict likely to add 3 to 6 percentage points to food prices.
On March 5, Middle East urea prices closed over $590 per metric ton, up over $90 per metric ton compared to a week earlier, a 19% increase.
The US-Iran deal is seen as a positive step towards reducing tensions and promoting stability in the region, with the potential to lower oil prices and food prices.
Human Impact of the US-Iran Deal
The deal is expected to have a significant impact on the lives of people around the world, particularly those who are already struggling to access food and other basic necessities.
According to the UN World Food Programme, the number of people facing acute hunger could increase by 45 million if the war lasts beyond June 2026.
Meanwhile, sources confirmed that the deal is seen as a positive step towards promoting stability and reducing tensions in the region.
However, some experts are cautious, saying that the deal's success is not guaranteed and that many factors can still affect oil prices and food prices.
Despite this, officials said that the deal is a positive step towards reducing the human impact of the war and promoting stability in the region.
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