Oil prices moved lower on Tuesday after U.S. President Donald Trump announced that a planned military strike against Iran had been postponed to leave room for continued diplomatic negotiations aimed at ending the Middle East conflict.
Trump said Monday in a social media post that the United States had suspended an attack initially scheduled for Tuesday while talks continue. He added that Washington remains ready to resume military operations if negotiations fail to produce a resolution.
Brent crude futures for July delivery fell $2.02, or 1.8%, to $110.08 a barrel by 0802 GMT. U.S. West Texas Intermediate crude for June delivery, which expires Tuesday, slipped 47 cents, or 0.4%, to $108.19 a barrel. The more heavily traded July WTI contract dropped $1.15, or 1.1%, to $103.23.
“While Trump’s signal has eased some immediate pressure, the fundamental risks persist …. The market is now watching whether Trump’s comments represent a genuine shift toward de-escalation or just a tactical pause,” said Tim Waterer, chief market analyst at KCM Trade.
During Monday’s session, Brent and WTI had climbed to their highest levels since May 5 and April 30 respectively.
The conflict in the Middle East has effectively disrupted traffic through the Strait of Hormuz, a critical shipping route responsible for transporting roughly 20% of global oil and liquefied natural gas supplies. The International Energy Agency has described the situation as the most significant oil supply disruption currently facing world markets.
According to Iranian state media, Tehran’s latest peace proposal to Washington includes ending military operations across all fronts, including Lebanon, the withdrawal of U.S. forces from areas near Iran and compensation for damage caused by the conflict.
Separately, U.S. Treasury Secretary Scott Bessent extended a sanctions exemption for an additional 30 days, allowing countries considered “energy-vulnerable” to continue importing Russian seaborne crude.
In the United States, Energy Department figures showed that 9.9 million barrels were withdrawn from the Strategic Petroleum Reserve last week, marking a record drawdown and reducing inventories to approximately 374 million barrels, their lowest level since July 2024.
Market participants are also awaiting official Energy Information Administration data due Wednesday, with analysts forecasting a decline of around 3.4 million barrels in U.S. crude stockpiles for the week ending May 15.
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