Oil prices fell for a second day as Trump hinted at an Iran peace deal

MELBOURNE: Oil prices fell for a second day on Wednesday on expectations that bottled supplies from the Middle East’s main producing region could resume after US President Donald Trump signaled a possible peace deal to end the war with Iran.

Brent crude futures for July were down $1.52, or 1.38%, at $108.35 a barrel by 0103 GMT after falling 4% in the previous session. The US Benchmark West Texas Intermediate futures for June fell $1.50, or 1.47%, to $100.77, after closing down 3.9% a day earlier.

On Tuesday, Trump unexpectedly said he would briefly pause operations to help escort ships through the Strait of Hormuz, citing progress toward a broader agreement with Iran, without giving details of the agreement.

There was no immediate reaction from Tehran, where she was early Wednesday morning.

However, Trump said the US Navy would continue the blockade of Iranian ports. The Strait of Hormuz, which normally carries about a fifth of the world’s oil and natural gas supplies, has been cut off the most since the US-Israeli war against Iran began on February 28.

A supply deficit in the global market last week saw Brent trading at its highest level since March 2022.

“We have mutually agreed that, while the embargo remains in full force and effect, Project Freedom … will be paused for a short period of time to see if an agreement can be finalized,” Trump wrote on social media.

Trump’s announcement came hours after US Secretary of State Marco Rubio briefed reporters on efforts announced 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 ships through the strait from the Gulf.

The closure of the Strait of Hormuz has reduced global inventories as refiners try to fill the shortfall.

US crude oil inventories fell for a third week, while gasoline and distillate stocks also fell, market sources said on Tuesday, citing data from the American Petroleum Institute.

Crude stocks fell by 8.1 million barrels in the week ended May 1, sources said. Gasoline inventories fell by 6.1 million barrels, while distillate inventories fell by 4.6 million barrels from a week earlier, the sources said.