Global oil markets retreated Wednesday following fresh statements from U.S. President Donald Trump predicting the Iran conflict will conclude “very quickly,” though energy traders continue to express caution regarding diplomatic efforts and ongoing Middle Eastern supply chain interruptions.
Brent crude futures dropped 45 cents, representing a 0.4% decline to $110.83 per barrel by 0050 GMT, while U.S. West Texas Intermediate futures decreased 27 cents, or 0.3%, settling at $103.88.
Both oil benchmarks experienced nearly $1 declines Tuesday following statements from U.S. Vice President JD Vance indicating advancement in diplomatic discussions, with both nations expressing reluctance to resume military operations.
“Investors are keen to gauge whether Washington and Tehran can actually find common ground and reach a peace agreement, with the U.S. stance shifting daily,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“Oil prices are likely to remain elevated given the possibility of renewed U.S. attacks on Iran and expectations that, even if a peace deal is reached, crude supply will not quickly return to pre-war levels,” he said.
While Trump told U.S. lawmakers late Tuesday about rapidly concluding the conflict, he previously indicated the United States might need to launch additional strikes against Iran and had come within an hour of authorizing an attack before delaying the decision.
His statements regarding potential additional strikes followed his announcement that he had delayed planned military action resumption after Tehran presented a new proposal to conclude the U.S.-Israeli war.
During Tuesday’s remarks, Trump also claimed Iran’s leadership is desperately seeking an agreement and cautioned that additional U.S. military action could occur within days without a resolution.
The U.S.-Israeli military campaign against Iran has resulted in the practical shutdown of the Strait of Hormuz, which typically handles approximately one-fifth of worldwide oil shipments, creating what the International Energy Agency describes as the globe’s most significant oil supply interruption.
Citi announced Tuesday its projection for Brent crude to climb to $120 per barrel in the immediate future, arguing that energy markets are underestimating risks of extended supply disruptions and broader potential complications.
To compensate for global supply shortages resulting from the conflict, nations are drawing upon their commercial and strategic reserves.
Within the U.S., crude oil stockpiles declined for the fifth consecutive week, based on market sources referencing American Petroleum Institute data released Tuesday, with fuel inventories also showing decreases.
U.S. crude reserves tracked by the Energy Information Administration are projected to have dropped approximately 3.4 million barrels during the week ending May 15, according to a Reuters survey. The weekly EIA report is scheduled for release later Wednesday.
