WEB DESK: Global oil prices declined for a second straight day on Wednesday as markets reacted to signs of a possible diplomatic breakthrough between the United States and Iran, raising hopes that disrupted energy supplies from the Middle East could soon resume.
Brent crude for July delivery dropped $1.52, or 1.38%, to $108.35 per barrel in early trading, extending a 4% loss from the previous session. Meanwhile, U.S. benchmark West Texas Intermediate (WTI) for June fell $1.50, or 1.47%, to $100.77 after a nearly 4% decline a day earlier.
The downward pressure followed comments from Donald Trump, who signaled progress toward a potential agreement with Iran that could bring an end to the ongoing conflict. He also announced a temporary halt to a U.S. naval initiative aimed at escorting commercial vessels through the Strait of Hormuz.
Iran has yet to respond publicly to the remarks, which came during the early morning hours in Tehran. Despite the pause in escort operations, Trump said U.S. forces would maintain their blockade of Iranian ports.
The Strait of Hormuz responsible for transporting roughly 20% of the world’s oil and gas has been largely disrupted since hostilities between the U.S., Israel, and Iran escalated on February 28. The resulting supply constraints pushed oil prices to their highest levels since early 2022 in recent weeks.
In a social media statement, Trump said both sides had agreed to temporarily suspend “Project Freedom,” the escort mission, to allow time for negotiations to conclude, while keeping broader restrictions in place.
The announcement came shortly after Marco Rubio outlined ongoing efforts to secure safe passage for stranded tankers. Earlier this week, the U.S. military reported destroying Iranian boats, missiles, and drones while successfully guiding vessels through the strait.
Disruptions in the waterway have tightened global supply, leading to a drawdown in fuel inventories. According to industry data cited by market sources, U.S. crude stockpiles fell for a third consecutive week, dropping by 8.1 million barrels in the week ending May 1. Gasoline inventories declined by 6.1 million barrels, while distillates decreased by 4.6 million barrels.
The easing of prices reflects cautious optimism among investors that a resolution could stabilize energy flows, even as tensions in the region remain unresolved.
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