Oil Drops Nearly 2% After Trump Suspends Attack on Iran

SadaNews - Oil prices fell by nearly 2% on Tuesday after U.S. President Donald Trump announced the suspension of a planned attack on Iran to allow for negotiations aimed at ending the war.

Brent crude futures for July fell by approximately 1.9% to $109.88 per barrel.

Meanwhile, U.S. West Texas Intermediate (WTI) crude for June dropped by 1.5% to $106.99 per barrel.

The two benchmark crudes had recorded their highest levels in the previous session since May 5 and April 30, respectively.

The June crude contract for U.S. oil expires today, while the more active July contract fell by $2.06 or 2% to $102.32 per barrel.

Trump stated on Monday that there is a "very good chance" for the U.S. to reach an agreement with Iran to prevent it from obtaining nuclear weapons, just hours after announcing the suspension of military action to facilitate talks.

Tim Waterer, an analyst at KCM Trade, noted that Trump's remarks eased some immediate pressures on the markets, but the fundamental risks remain, according to Reuters.

He added that the markets are currently watching whether Trump's statements represent a genuine shift towards de-escalation or merely a temporary tactical pause, mentioning that Iran's response and developments regarding oil tanker movements through the Strait of Hormuz will remain crucial factors in determining the direction of oil prices in the near future.

The conflict has caused a near closure of the Strait of Hormuz, through which about one-fifth of global oil supplies pass before the war erupted, raising widespread concerns about supply disruptions.

Iranian Foreign Ministry spokesman Ismail Baghaei confirmed on Monday that Tehran's position was communicated to the U.S. via Pakistan, without revealing additional details.

A Pakistani official, speaking on condition of anonymity, stated that Islamabad conveyed a new proposal between the two sides, but noted that progress is still slow.

On the other hand, the semi-official Tasnim agency reported that Washington agreed during negotiations to lift sanctions on Iranian oil exports, though a U.S. official denied those reports.

Additionally, U.S. Treasury Secretary Scott Bicen announced that the department will extend the sanctions exemption allowing the purchase of Russian oil transported by sea for an additional 30 days, aimed at supporting countries at risk of energy shortages.

In the U.S., data from the Department of Energy indicated a record withdrawal of 9.9 million barrels from the strategic oil reserve last week, reducing stockpiles to approximately 374 million barrels, the lowest level since July 2024.

For his part, Fatih Birol, head of the International Energy Agency, stated that commercial oil inventories are declining rapidly, with supplies now sufficient for only a few weeks, amid ongoing conflict and disruptions in shipping.