Oil Prices Drop for Second Day, Trump Claims Major Progress in Iran Talks
Oil prices continued their decline for a second day after US President Donald Trump declared there had been "major progress" toward a final deal to end the war with Iran, triggering profit-taking after a sharp rally since the conflict began.
Brent crude oil fell to near US$108 per barrel, extending Tuesday's 4% decline. West Texas Intermediate (WTI) crude oil hovered around US$100, with the June contract down 1.3% to US$100.93 per barrel.
The market viewed the de-escalation signals as a potential easing of geopolitical risk premiums, although supply disruptions have not disappeared. Trump said US efforts to move ships through the Strait of Hormuz would be temporarily halted, while a naval blockade remains in place. Meanwhile, oil flows through the flashpoint remain restricted due to a "double blockade," with Tehran blocking shipping and the US preventing ships from accessing Iranian ports.
Since the conflict began in late February, Brent crude prices have risen about 50% as hundreds of millions of barrels of Persian Gulf oil are cut off from global markets. However, recent downward pressure suggests the market is beginning to test whether expectations of normalization can outpace the actual restoration of supplies on the ground.
Several US officials have also emphasized that the military phase of the operation has ended. Secretary of State Marco Rubio stated that "Operation Epic Fury" ended 66 days after the US and Israel began bombing Iran, while declaring that the operation's objectives had been achieved. Washington also downplayed the possibility of a return to active warfare, with Defense Secretary Pete Hegseth asserting that the ceasefire that began less than a month ago remains in effect. Chairman of the Joint Chiefs of Staff General Dan Caine assessed that Tehran's attacks on ships in the Persian Gulf and the United Arab Emirates did not constitute a ceasefire violation.
Despite the calm headlines, logistical obstacles remain a barrier to restoring supplies. Caine noted that the blockade around Hormuz has left more than 1,550 commercial vessels with approximately 22,000 sailors stranded in the Persian Gulf. Pepperstone strategist Dilin Wu believes that supply recovery is "inherently delayed" as shipments remain limited, blocked tankers need to be rerouted, insurance premiums must be adjusted for risk, and production takes time to ramp up.
From a short-term fundamental perspective, US industry data shows crude oil inventories fell by 8.1 million barrels last week. If confirmed by official data scheduled for release on Wednesday, this would be the largest decline since mid-February and potentially limit the room for price weakness through increasingly tight domestic supply chains.
However, volatility remains high. Since the outbreak of the war, extreme price fluctuations have prompted some market participants to reduce exposure; aggregate open interest for Brent fell to its lowest level since August. At the same time, Saudi Arabia cut its flagship oil selling price for Asia next month from its record high in May, although prices remain high due to supply disruptions in the Middle East that have not yet been fully resolved.
Going forward, the market will be monitoring two key factors: developments regarding shipping access in the Strait of Hormuz (including the status of the blockade and alternative tanker routes) and confirmation of official US inventory data, which could alter perceptions of the supply-demand balance in the short term. (asd)*
Source: Newsmaker.id
