Synopsis
Oil prices fell for a second day as US President Trump hinted at a possible peace deal with Iran, raising hopes of restoring supply routes to the Middle East. Trump announced a temporary pause in escorting ships through the Strait of Hormuz, a key oil transit point.
AgenciesOil prices fell for a second day as US President Trump hinted at progress towards a peace deal with Iran that could ease supply disruptions.Oil price fell for a second straight day Wednesday as hopes grew that disrupted supplies from the Middle East could return if a possible peace deal between the United States and Iran materializes. This followed comments by US President Donald Trump hinting at progress towards ending the conflict.
Trump said Tuesday that an operation to escort ships through the Strait of Hormuz ” would be briefly interrupted, citing a move toward a broader deal with Iran, although it did not provide details. There was no immediate response from Tehran, where it was still early Wednesday morning.
Crude oil prices on May 6
Brent crude for July delivery fell $1.52, or 1.38%, to $108.35 a barrel, after losing 4% in the previous session. U.S. West Texas Intermediate crude for June fell $1.50, or 1.47%, to $100.77, following a 3.9% decline on Tuesday.
He added that the US Navy would continue its blockade of Iranian ports. The Strait of Hormuz, which normally receives about a fifth of the world’s oil and natural gas shipments, has been largely closed since the start of the US-Israeli conflict with Iran on February 28.
The disruption has tightened global supply, pushing Brent prices last week to their highest level since March 2022.
In a social media post, Trump said both sides had agreed that while the blockade would remain fully in place, “Project Freedom” would be temporarily suspended to allow time for the deal to be finalized.
His remarks came shortly after U.S. Secretary of State Marco Rubio briefed reporters on the escort initiative announced Sunday to help stranded oil tankers cross the strait. On Monday, the U.S. military said it destroyed several small Iranian boats as well as cruise missiles and drones while escorting two ships out of the Gulf.
On Tuesday, Washington downplayed the prospect of a return to active war, with Defense Secretary Pete Hegseth confirming that the truce that began just under a month ago was still in effect. For his part, General Dan Caine, chairman of the Joint Chiefs of Staff, said Tehran’s attacks on ships in the Persian Gulf and the United Arab Emirates did not constitute a violation of the ceasefire.
Experts still worried
Regarding the outlook, Haitong Futures noted that the current ceasefire may be temporary. The lack of progress in negotiations between the United States and Iran could lead to further escalation, which could drive up oil prices.
Nuvama Institutional Equities echoed a similar view, saying a prolonged closure of the Strait of Hormuz, which carries about 20 million barrels per day, could push crude prices into the $110-$150 range.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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