Oil prices dropped for a second consecutive day on Wednesday, driven by expectations that constrained supply from the Middle East could begin to ease following indications of a potential agreement between the United States and Iran.
Brent crude futures fell by $1.89, or 1.7%, to $107.98 per barrel after a 4% decline in the previous session. Meanwhile, US West Texas Intermediate crude slipped $1.83, or 1.8%, to $100.44, adding to a 3.9% drop recorded a day earlier.
The downward trend followed remarks by US President Donald Trump, who suggested that progress was being made toward a comprehensive understanding with Iran. He also announced a temporary pause in an operation aimed at escorting vessels through the Strait of Hormuz, though specific details of the potential agreement were not disclosed. There was no immediate response from Tehran.
Market analysts noted that the development could signal a reduction in tensions, potentially allowing vessels stranded in the Gulf region to resume movement. This, in turn, may gradually restore oil supply to global markets. However, uncertainty surrounding the outcome of any agreement continues to keep prices above the $100 per barrel mark, and a full recovery in trade flows is expected to take time even if a deal is finalized.
Despite the pause in escort operations, the United States is maintaining its blockade of Iranian ports. Supply disruptions linked to the situation have supported elevated prices in recent weeks, with Brent crude reaching its highest levels since March 2022.
Earlier in the week, US authorities had initiated efforts to assist stranded tankers in navigating the Strait of Hormuz. Military operations in the region reportedly included action against Iranian vessels, missiles, and drones, while facilitating the safe passage of some ships.
The disruption in the Strait of Hormuz has contributed to tightening global oil inventories, as refineries attempt to compensate for reduced supply.
Recent data indicated a continued decline in US crude inventories for the third consecutive week. Crude stocks dropped by 8.1 million barrels in the week ending May 1. Gasoline inventories fell by 6.1 million barrels, while distillate stocks decreased by 4.6 million barrels compared to the previous week.