07/05/2026 01:32 AST
Oil prices fell for a second day on Wednesday on expectations bottled-up supply from the key Middle East producing region could resume ?flowing after US President Donald Trump indicated a possible peace deal may be reached to ?end the war with Iran.
Brent crude futures fell $1.69, or 1.5 percent, to $108.18 a barrel as of 09:40 a.m. Saudi time, after dropping 4 percent in the previous session. US West Texas Intermediate futures eased $1.67, or 1.6 percent, to $100.60, after settling down 3.9 percent the day before.
On Tuesday, ?Trump unexpectedly said he would briefly pause an operation to help escort ships through the Strait of ?Hormuz, citing progress toward a comprehensive agreement with Iran, without giving details on ?the agreement. There was no immediate reaction from Tehran.
"This signals potential de-escalation and raises hopes for the ?release of stranded vessels inside the Gulf, which could gradually bring supply back to the market," said Anh ?Pham, senior research specialist for oil at LSEG.
Pham added that prices remain elevated as prospects for a peace deal remain uncertain, while it will take time for trade flows to be fully restored even if a deal is reached.
Trump said ?the US Navy would continue its blockade of Iranian ports. The supply loss to the global market ?has pushed prices higher with Brent trading last week at its highest since March 2022.
"We have mutually agreed that, while ?the ?Blockade will remain in full force and effect, Project Freedom ... will be paused for a short period of time to see whether or not the Agreement can be finalized and signed," Trump wrote on social media.
Trump's announcement came only hours after US Secretary of State Marco Rubio briefed reporters on the effort, announced ?on Sunday, to escort stranded ?tankers through the strait. ?On Monday, the US military said it had destroyed several Iranian small boats, as well as cruise missiles and drones, while guiding two vessels out of the ?Gulf through the strait.
The Strait of Hormuz closure has drawn down global inventories ?as refineries ?try to make up the production shortfall.
US crude oil inventories fell for a third week, while gasoline and distillate stocks also declined, market sources said on Tuesday, citing American Petroleum Institute figures.
Crude stocks fell by 8.1 million ?barrels in ?the week ended May 1, the sources said. Gasoline inventories ?fell by 6.1 million barrels, while distillate inventories fell by 4.6 million barrels compared to a week earlier, the sources said.
Reuters
Please wait...
