Oil prices continued to retreat on Wednesday after U.S. President Donald Trump indicated that negotiations with Iran may be advancing, raising hopes that disrupted Middle Eastern crude supplies could eventually return to global markets.
Brent crude futures fell $6.70, or 6.1%, to $103.17 per barrel by 08:56 GMT after earlier slipping to their lowest level in nearly two weeks. U.S. West Texas Intermediate crude dropped $6.77, or 6.6%, to $95.50 a barrel. Both benchmarks had already declined roughly 4% during the previous session.
Strait of Hormuz disruption had fueled oil rally
The shutdown of shipping activity through the Strait of Hormuz since February has tightened global oil supplies and pushed prices sharply higher, with Brent crude reaching its highest level since March 2022 last week.
However, Trump said Tuesday that the United States would temporarily suspend its naval escort operation through the strategic waterway, citing progress toward a broader diplomatic agreement with Iran.
Although the president did not provide additional specifics, he confirmed that the U.S. Navy would continue enforcing a blockade on Iranian ports.
Iran seeks balanced agreement as diplomacy continues
Iran said it would only support a comprehensive and fair agreement, while Foreign Minister Abbas Araqchi avoided directly responding to Trump’s proposal to pause U.S. ship escort operations.
Earlier this week, the U.S. military stated that several Iranian small boats had been destroyed during efforts to assist commercial vessels stranded in the narrow shipping corridor.
Falling inventories underline pressure on energy markets
The closure of the Strait of Hormuz has contributed to declining global oil and fuel stockpiles as refiners attempt to offset supply shortages.
According to market sources citing figures from the American Petroleum Institute, U.S. crude inventories fell for a third straight week, while gasoline and distillate supplies also decreased.
Crude oil stockpiles dropped by 8.1 million barrels in the week ending May 1, sources said. Gasoline inventories fell by 6.1 million barrels, while distillate stocks declined by 4.6 million barrels over the same period.
Official inventory data from the U.S. Energy Information Administration is expected at 14:30 GMT.
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