Key points
- RIA Novosti, Russia's state news agency, said the United States and Iran had reached a ceasefire agreement, attributing the claim to Pakistani military and Iranian security sources. Neither government nor any Western news organization has confirmed the report.
- Oil sold off on the report. USO fell 4.6% and BNO fell 4.8%.
- The reported deal reopens the Strait of Hormuz to free navigation. The last 60-day U.S.-Iran ceasefire ran out in mid-August with no permanent deal.
Oil fell Tuesday after RIA Novosti, a Russian state news agency, reported that the United States and Iran had agreed to a ceasefire. RIA said the account came from Pakistani military and Iranian security sources. Neither government confirmed it.
Traders sold crude and the companies that pump it. The United States Oil Fund (USO), which follows crude futures, ended down 4.6% at $126.10. The Brent version, BNO, fell 4.8%. Exxon Mobil (XOM) lost 2.1%. Chevron (CVX) and the energy-sector fund XLE each slipped 1.6%. Brent and West Texas Intermediate crude both fell about $2 a barrel in the hour after the report hit, according to market desks.
RIA said both governments had signed off and would announce the deal within days. It said the deal guarantees ships free passage through the Strait of Hormuz, the channel that carries a big share of the world's oil. The agency also said officials would hold technical talks under the Islamabad Memorandum, a framework Pakistan negotiated earlier this year.
Has anyone else confirmed the report?
Not yet. As of Tuesday evening, no U.S., Iranian, or Gulf state official and no Western wire service had confirmed the account. Iranian state outlets IRNA and Press TV, which usually move quickly to report developments favorable to Tehran, had not carried it. TASS, another Russian agency, separately ran a Reuters line that the two sides had no deal to extend their ceasefire.
The report follows months of on-and-off fighting. The United States and Iran signed a memorandum of understanding in mid-June that paused fighting for 60 days. That ceasefire expired around August 17 with no permanent agreement, and both sides resumed attacks.
Analysts noted the drop looked large for a report carried by a single agency, and said crude could reverse quickly if the account does not hold up. By Tuesday evening, the report rested on that one source, and neither government had commented.
