Oil Prices Decline in Volatile Trade After Ceasefire Extension
Oil prices moved lower during choppy Asian trading on Wednesday after U.S. President Donald Trump announced an indefinite extension of the ceasefire with Iran. Despite the move, markets remained tense due to ongoing uncertainty around future peace negotiations and persistent supply disruptions.
Supply Concerns Persist as Strait of Hormuz Remains Closed
Fears over disrupted oil supply continued to weigh on sentiment, particularly with the Strait of Hormuz still effectively closed. The U.S. naval blockade on Iran also remains in place, limiting shipping activity through one of the world’s most critical energy routes.
Brent crude futures dropped nearly 1% to $97.56 per barrel, while West Texas Intermediate (WTI) crude fell 1.2% to $84.95 per barrel. Both benchmarks experienced sharp intraday swings, reflecting heightened market volatility.
Ceasefire Extension Raises Questions Over Peace Talks
Trump confirmed on Tuesday that the ceasefire with Iran would be extended indefinitely to allow more time for negotiations. However, uncertainty remains as Iran has yet to formally respond to the extension.
Iranian officials had previously indicated that negotiations would not proceed while the U.S. naval blockade remains active. Adding to the uncertainty, both U.S. and Iranian representatives opted out of planned talks in Pakistan earlier this week.
Trump also stated that Iran is losing an estimated $500 million per day due to the closure of the Strait of Hormuz, emphasizing that any potential agreement would require lifting the blockade.
Hormuz Disruptions Continue to Drive Market Volatility
The Strait of Hormuz remains a central factor in the ongoing conflict, as it accounts for roughly 20% of global oil supply. Disruptions to shipping flows through the region have been a key driver of higher oil prices since tensions escalated in late February.
U.S. Inventory Draw Signals Tightening Supply
Recent industry data added to supply concerns. The American Petroleum Institute reported that U.S. crude inventories fell by 4.4 million barrels in the week ending April 17, significantly exceeding expectations for a 1 million barrel decline.
Such a large draw typically signals tightening supply conditions and may be reflected in official government data due later on Wednesday.
U.S. Measures Aim to Offset Rising Energy Costs
In response to rising oil prices and supply disruptions, the U.S. is considering additional measures to stabilize the market. These include potential releases from the Strategic Petroleum Reserve.
Reports also suggest that the administration may extend a waiver allowing foreign-flagged vessels to transport fuel between U.S. ports. This policy, initially introduced in mid-March, aims to improve domestic oil distribution and mitigate price pressures.
Meanwhile, U.S. gasoline prices have surged by approximately 40% since the start of the Iran conflict, highlighting the broader economic impact of the crisis.
