Oil prices crash as risk sentiment shifts, key benchmarks drop sharply

Global oil prices slid sharply on Wednesday (May 6), with major crude benchmarks falling more than 3% as traders weighed easing market fears and profit-taking ahead of the weekend.

At about 7:08 am Tokyo time on Wednesday, WTI crude futures were trading around $102.27 a barrel, down $3.91, or 3.7%, while Brent crude slipped to $110.29, a loss of $4.15, or 3.6%, according to OilPrice.org.

By about 7.05pm Tokyo, crude rates crashed: WTI was down more than 8% and Brent down more than 7%.

One trigger for the selloff: A report by Axios that Iran and the US are "close to agreeing" on a "one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations."

Washington is reportedly awaiting a response from Tehran on several key points in the next 48 hours.

Though nothing has been agreed yet, as per Axios, other fossil fuel products including Murban, natural gas, gasoline, heating oil were down.

Both benchmarks have been sensitive to shifting global economic and geopolitical dynamics this week.

Other grades also posted declines: Murban crude was down 1.37% in morning trade, gasoline fell nearly 2.9%, and natural gas lost about 3.6%, the data showed.

Market volatility was evident in differentials across the crude complex. The OPEC Basket eased 3.8% to $116.54, while US heavy grades such as Mars lost 4.85%.

Traders said the slide in prices reflected a combination of profit-taking and growing concern about demand in the world’s major consuming economies, including signs of softer economic data in China and the US.

No new disruptions

Analysts also noted that oil markets remain sensitive to developments in the Middle East and supply outlooks from major producers, though no significant new disruptions have been reported in recent sessions.

The US military has also reported initial success in "Project Freedom" allowing merchant ships to pass through Hormuz Strait despite Iran regime threats, while the US blockade on Iran holds.

Prices were moving before the European and US trading sessions, and figures remain subject to change as the market responds to fresh economic data and geopolitical headlines.