SINGAPORE: World oil prices fell for a second consecutive session on Wednesday after US President Donald Trump paused the Strait of Hormuz escort operation following Pakistan’s suggestion to create space for a possible peace agreement with Iran, raising hopes that disrupted Middle East oil supplies could gradually return to global markets.
Brent crude futures dropped $1.89, or 1.7 percent, to $107.98 per barrel after falling four percent in the previous session. US West Texas Intermediate crude also declined by $1.83, or 1.8 percent, to $100.44 a barrel.
The decline followed comments by Donald Trump suggesting progress towards a broader agreement with Iran. Trump said the United States would temporarily pause efforts to escort ships through the Strait of Hormuz while negotiations continue.
“We have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom … will be paused for a short period of time to see whether or not the Agreement can be finalized and signed,” Trump wrote on social media.
Diplomatic developments
Analysts said the development raised hopes that stranded vessels and disrupted oil shipments could eventually resume operations.
“This signals potential de-escalation and raises hopes for the release of stranded vessels inside the Gulf, which could gradually bring supply back to the market,” said Anh Pham, senior oil research specialist at LSEG.
Despite the decline, oil prices remain elevated due to ongoing uncertainty surrounding the conflict and shipping disruptions in the Strait of Hormuz, a critical global energy route.
Meanwhile, US crude inventories reportedly fell by 8.1 million barrels last week, according to market sources citing data from the American Petroleum Institute, adding further pressure to already tight global supplies.
Markets continue to monitor diplomatic developments closely as investors assess the possibility of a lasting agreement between Washington and Tehran.
