Oil prices continued to fall on Wednesday after U.S. President Donald Trump suggested that negotiations with Iran were making progress, raising expectations that disrupted Middle Eastern oil supply could eventually return to global markets.
Brent crude futures dropped $6.70, or 6.1%, to $103.17 a barrel by 08:56 GMT after earlier touching their lowest level in nearly two weeks. U.S. West Texas Intermediate crude declined $6.77, or 6.6%, to $95.50 a barrel. Both benchmarks had already fallen around 4% in the previous session.
Strait of Hormuz disruption had driven oil sharply higher
The suspension of marine traffic through the Strait of Hormuz since February has significantly tightened global supply conditions and pushed oil prices higher, with Brent crude reaching its strongest level since March 2022 last week.
However, Trump said Tuesday that he would temporarily suspend the U.S. operation escorting ships through the strategic waterway, citing progress toward a broader agreement with Iran.
While the president did not provide further details, he said the U.S. Navy would continue enforcing its blockade on Iranian ports.
Iran calls for fair agreement amid diplomatic efforts
Iran indicated it would only support a comprehensive and balanced agreement, although Foreign Minister Abbas Araqchi stopped short of directly responding to Trump’s proposal to pause U.S. naval escorts.
Earlier this week, the U.S. military said it had destroyed several small Iranian vessels during operations aimed at assisting stranded commercial ships attempting to leave the narrow shipping route.
Inventory declines highlight pressure on global supply
The closure of the Strait of Hormuz has contributed to falling global oil and fuel inventories as refiners attempt to compensate for supply shortages.
According to market sources citing data from the American Petroleum Institute, U.S. crude inventories declined for a third consecutive week, while gasoline and distillate stockpiles also fell.
Crude oil inventories dropped by 8.1 million barrels in the week ended May 1, sources said. Gasoline inventories declined by 6.1 million barrels, while distillate stocks fell by 4.6 million barrels over the same period.
Official inventory figures from the U.S. Energy Information Administration are scheduled for release at 14:30 GMT.