Oil prices fell around 3 percent on Wednesday as traders assessed progress in US-Iran peace talks against a backdrop of renewed hostilities. Brent crude futures dropped $2.67, or 2.68 percent, to $96.91 a barrel by 02:39 p.m. Saudi time, while US West Texas Intermediate crude lost $3.43, or 3.65 percent, to $90.46 a barrel. The decline erased Brent's gains from the previous session.
Market Reactions to Geopolitical Developments
Analysts noted that the downward pressure resumed due to tangible progress toward ending the crisis. PVM analyst Tamas Varga highlighted an increasing number of ships transiting the critical Strait of Hormuz, a key chokepoint for global oil and gas flows. He stated that this development contributed to the renewed downward price pressure.
Earlier, July Brent futures had risen 3.6 percent after the US carried out new strikes in Iran, dampening hopes that had emerged over the weekend for a peace deal between Washington and Tehran. Commerzbank analysts remarked that hopes for a framework agreement had been somewhat dampened by recent US strikes on Iranian missile sites and vessels allegedly attempting to lay mines in the Strait of Hormuz. However, they added that confidence among market participants remained high.
Conflicting Statements and Ceasefire Violations
Iran accused the US on Tuesday of violating a ceasefire by striking targets near the Strait of Hormuz, while Washington defended its actions as defensive. Meanwhile, Israel intensified bombing in Lebanon, further straining peace efforts. Despite an April ceasefire in the three-month-long conflict, both sides indicated progress in talks toward reopening the Strait.
Supply Outlook and LNG Tanker Movements
News that some LNG tankers have passed through the Strait in recent days boosted expectations that the waterway might reopen soon, which would add to global supply. This development has been a key factor in easing market concerns about supply disruptions.
