Oil Prices Drop Sharply on Middle East Ceasefire Hopes
Oil prices fell significantly on Wednesday, declining around 4% after reports that the United States had presented Iran with a 15-point proposal aimed at ending the Middle East conflict. The development raised expectations of a potential ceasefire, which could help ease disruptions to global oil supply.
Brent crude dropped $4.17, or 4%, to $100.32 per barrel by 07:08 GMT, after briefly falling to $97.57. Meanwhile, U.S. West Texas Intermediate (WTI) crude declined $3.11, or 3.4%, to $89.24 per barrel, after touching a low of $86.72.
Both benchmarks had gained nearly 5% in the previous session before reversing course in volatile trading.
Ceasefire Prospects Trigger Profit-Taking
Market analysts noted that rising expectations of a ceasefire prompted investors to lock in profits, contributing to the price decline. However, uncertainty surrounding the success of negotiations continues to limit further downside.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, stated that while hopes for de-escalation have improved slightly, the outcome of negotiations remains unclear, keeping markets cautious.
U.S. President Donald Trump confirmed that Washington is making progress in negotiations with Iran, while sources indicated that a detailed settlement proposal had been delivered.
Reports suggest the U.S. is seeking a temporary ceasefire of around one month to facilitate discussions. The proposed framework reportedly includes measures such as dismantling Iran’s nuclear program, halting support for proxy groups, and reopening the Strait of Hormuz.
Despite these developments, some analysts remain skeptical, expecting continued volatility in oil markets.
Strait of Hormuz Disruptions Keep Supply Tight
Developments in the Middle East continue to dominate oil price movements, with the Strait of Hormuz playing a critical role. The conflict has severely disrupted shipments of oil and liquefied natural gas through the Strait, a key route that typically handles around one-fifth of global supply.
The International Energy Agency has described the situation as one of the largest oil supply disruptions in history.
Energy analysts warn that even if a ceasefire is reached, it remains uncertain how quickly production and supply flows will fully recover. Concerns persist over whether any agreement would be durable enough to restore confidence in the market.
Iran has indicated that non-hostile vessels may pass through the Strait if they coordinate with its authorities, but ongoing military activity in the region continues to pose risks.
Saudi Exports Rise as Alternative Routes Expand
To offset disruptions in the Strait of Hormuz, Saudi Arabia has increased oil exports via its Red Sea port in Yanbu. Shipments rose to nearly 4 million barrels per day last week, marking a sharp increase compared to pre-conflict levels.
At the same time, geopolitical tensions remain elevated, with reports suggesting the United States is preparing to deploy additional troops to the region.
U.S. Inventory Build Adds Further Pressure
In the United States, crude oil inventories increased last week, adding further downward pressure on prices. Data cited from the American Petroleum Institute showed that crude stockpiles rose by 2.35 million barrels for the week ending March 20.
Gasoline inventories also increased by 528,000 barrels, while distillate stocks rose by 1.39 million barrels, indicating softer demand conditions.
