Oil prices tumble as Trump hints at Iran deal, easing supply fears
Oil prices deepened their losses on Wednesday after U.S. President Donald Trump suggested that negotiations with Iran were gaining traction, stoking hopes that the prolonged disruption to Middle Eastern oil flows might soon ease. Brent crude futures plunged $6.70, or 6.1%, to $103.17 a barrel by 08:56 GMT, after touching their lowest level in nearly two weeks earlier in the session. U.S. West Texas Intermediate crude fell $6.77, or 6.6%, to $95.50 a barrel. Both benchmarks had already dropped around 4% in the previous session.
The suspension of maritime traffic through the Strait of Hormuz since February has severely tightened global supply and sent oil prices soaring, with Brent hitting its highest level since March 2022 just last week. But Trump's remarks on Tuesday—indicating he would temporarily halt the U.S. naval escort operation through the strategic waterway—signaled a potential diplomatic breakthrough. He cited progress toward a broader agreement with Iran, though he offered no specifics and stressed that the U.S. Navy would continue enforcing the blockade on Iranian ports.
Iran's Foreign Minister Abbas Araqchi responded cautiously, saying Tehran would only support a comprehensive and balanced deal, without directly addressing Trump's proposal to pause U.S. escorts. Earlier this week, the U.S. military said it had destroyed several small Iranian vessels during operations to assist stranded commercial ships trying to exit the narrow shipping lane.
The closure of the Strait of Hormuz has contributed to falling global oil and fuel inventories as refiners scramble to compensate for supply shortages. Market sources citing data from the American Petroleum Institute said U.S. crude inventories dropped by 8.1 million barrels in the week ended May 1—the third consecutive weekly decline. Gasoline inventories fell by 6.1 million barrels, while distillate stocks decreased by 4.6 million barrels over the same period. Official inventory figures from the U.S. Energy Information Administration are due at 14:30 GMT.
Market Reactions:
“This is a classic case of geopolitics driving volatility,” said James Hargrove, an energy analyst at Houston-based consultancy Blackstone Global. “If a deal materializes, we could see Brent slide back toward $90. But the devil is in the details—and Iran isn’t exactly rolling out the red carpet.”
“I’m not buying the hype,” said Maria Chen, a crude oil trader in Singapore. “Trump says one thing, Iran says another, and meanwhile the Strait is still effectively closed. This feels like a temporary dip, not a trend. I’m holding my positions.”
“Are we really supposed to believe this is a done deal?” fumed David Okonkwo, a Lagos-based shipping broker. “The man just blew up Iranian boats three days ago, and now he’s talking peace? Give me a break. The market is overreacting, as usual. This is just noise until I see tankers actually moving through Hormuz again.”
The coming days will be critical as traders watch for any concrete steps from both sides. For now, the oil market remains on edge, caught between diplomatic signals and the harsh reality of a choked supply route.