Oil Declines for the Second Day as Iran Talks Progress

SadaNews - Oil prices fell for the second day after U.S. President Donald Trump stated that there has been "significant progress" towards a final agreement to end the war with Iran.

Brent crude dipped towards $108 a barrel after dropping by 4% on Tuesday, while West Texas Intermediate crude hovered near $100.

Trump said in a post on "Truth Social" that U.S. efforts to free ships in the Strait of Hormuz would be suspended, but the maritime blockade would remain in place.

A Double Blockade Restricts Global Supplies

Global benchmark crude has risen nearly 50% since the beginning of the conflict at the end of February, which has led to hundreds of millions of barrels of oil from the region being kept off global markets.

Flow through this vital corridor has been constrained by a double blockade, with Tehran obstructing navigation, while the United States prevents ships from reaching Iranian ports.

Earlier, U.S. Secretary of State Marco Rubio told reporters at the White House that the "Epic Fury" operation had ended after 66 days of U.S. and Israeli airstrikes against Iran, adding: "We achieved the goals of that operation."

On Tuesday, Washington sought to downplay the chances of returning to active war, with Defense Secretary Pete Hegseth insisting that the ceasefire that began less than a month ago remains in effect.

Meanwhile, General Dan Kin, Chairman of the Joint Chiefs of Staff, stated that Tehran's attacks on ships in the Gulf and the UAE do not constitute a violation of the ceasefire. Kin added that the blockade around Hormuz has led to the detention of over 1,550 commercial ships, carrying about 22,000 sailors, inside Gulf waters.

Supply Recovery Takes Time

Dilyn Wu, a research strategist at "Piper Sandler," noted: "Even if we see headlines suggesting de-escalation, supply recovery is inherently delayed."

She added: "This is not a switch that can be turned on immediately, as oil shipments through the strait remain constrained. It also takes time to redirect stranded tankers, to reprice risks in the insurance market, and to ramp up production levels again."

In the United States, sector data showed a decline in crude oil inventories by 8.1 million barrels last week, which could be the largest drop since mid-February, pending confirmation from official data expected later on Wednesday.

Carl Larry, an oil and gas analyst at "Energy & Oil," stated: "We are witnessing a daily pattern of rises followed by profit-taking." He added: "Markets may deal with this smoothly, but excessive optimism often prevails in the end. The drop in inventories attracts all optimists into the market."

Oil has seen sharp price fluctuations since the war began, prompting traders to be cautious to avoid excessive volatility. The total open interest in Brent crude contracts has fallen to its lowest level since August.

Meanwhile, Saudi Arabia has reduced its main crude price for Asia next month from a record level set in May, but it remains high amid ongoing turmoil in the Middle East that significantly disrupts supplies.