Oil Prices Extend Decline Amid Hopes for Iran Agreement
Oil prices continued to move lower on Wednesday as signs of easing geopolitical tensions in the Middle East outweighed ongoing supply concerns. Investors also monitored a sharp decline in U.S. crude inventories.
Brent crude futures for July delivery fell 1.9% to $107.78 per barrel by 02:23 ET (06:23 GMT), while U.S. West Texas Intermediate crude futures dropped 2.1% to $100.15 per barrel.
Both benchmark contracts had already settled nearly 4% lower during the previous trading session.
Trump Pauses Hormuz Operation
U.S. President Donald Trump announced on Tuesday that Washington would temporarily pause operations aimed at restoring commercial shipping through the Strait of Hormuz.
The move increased market optimism surrounding a possible diplomatic agreement with Iran.
In a social media statement, Trump said that although the blockade would remain active, “Project Freedom” — the initiative focused on securing maritime traffic through the Strait of Hormuz — would be paused temporarily to allow negotiations to continue.
The development followed heightened tensions earlier this week after the operation triggered a military response from Iran.
Oil Markets Focus on Strait of Hormuz
Analysts at ING said that any agreement capable of normalizing oil flows through the Strait of Hormuz would be critical for global energy markets.
According to ING, around 13 million barrels per day of disrupted supply are currently being offset through existing inventories, which are declining rapidly.
The analysts warned that tightening oil stockpiles could leave the market increasingly vulnerable to volatility in the coming weeks.
U.S. Crude Inventories Fall Sharply
Despite the decline in oil prices, losses were partially limited by fresh signs of tightening supply in the United States.
Data released by the American Petroleum Institute showed that U.S. crude inventories fell by 8.1 million barrels during the latest week, significantly larger than market expectations.
Gasoline inventories declined by 6.1 million barrels, while distillate stocks dropped by 4.6 million barrels.
Investors are now awaiting official inventory data from the U.S. Energy Information Administration, which is scheduled to be released later on Wednesday.
