Oil prices eased on Wednesday after U.S. President Donald Trump again asserted that the war with Iran will end 'very quickly', though investors remain wary about the outcome of peace talks amid continued disruptions to Middle East supply. According to The Economic Times, Brent crude oil futures fell 45 cents, or 0.4%, to $110.83 a barrel by 0050 GMT, while U.S. West Texas Intermediate futures were down 27 cents, or 0.3%, to $103.88. Trump's latest comments came after he earlier said the United States may need to strike Iran again and had been an hour away from ordering an attack before postponing it. His remarks on the need to strike again came a day after he said he had paused a planned resumption of hostilities following a new proposal by Tehran to end the U.S.-Israeli war.
Investors are keen to gauge whether Washington and Tehran can actually find common ground and reach a peace agreement, with the U.S. stance shifting daily. As reported by The Economic Times, U.S. Vice President JD Vance said the U.S. and Iran had made progress in talks, with neither side wanting to see a resumption of military action. However, Trump also warned that a new U.S. attack would happen in coming days if no agreement was reached, with Iran's leaders reportedly begging for a deal. The president claimed that leaders from Qatar, Saudi Arabia and the United Arab Emirates had approached Washington expressing hope that a deal could be reached, with the proposed agreement being 'very acceptable' to the US. Iran confirmed it had sent its position to Washington through Pakistan, with Foreign Ministry spokesperson Esmaeil Baghaei stating Tehran's views were 'conveyed to the American side through Pakistan' without giving details.
The U.S.-Israeli war against Iran has caused the effective closure of the Strait of Hormuz, which normally carries about a fifth of global oil supplies, creating the world's biggest oil supply disruption, according to the International Energy Agency. According to The Economic Times, Citi on Tuesday said it expects Brent crude to rise to $120 a barrel in the near term, stating that oil markets are under-pricing the risk of a prolonged supply disruption and broader tail risks. To make up the shortfall in global supplies from the war, countries are relying on their commercial and strategic inventories. The closure of this strategic chokepoint continues to create significant supply chain disruptions for global energy markets, with Iran signalling it is focused on ending the war and reopening the Strait of Hormuz.
In the U.S., crude oil inventories fell for a fifth straight week last week, according to market sources citing American Petroleum Institute data released on Tuesday, while fuel stocks also fell. As reported by The Economic Times, U.S. crude stockpiles reported by the Energy Information Administration are expected to have fallen by about 3.4 million barrels in the week to May 15, according to a Reuters poll. Four analysts polled by Reuters estimated, on average, that U.S. crude inventories fell by about 3.4 million barrels in the week that ended on May 15, with official data from the Energy Information Administration scheduled for release on May 20. A record 9.9 million barrels were drawn from the Strategic Petroleum Reserve last week, bringing stockpiles down to about 374 million barrels, the lowest since July 2024.
Analysts warn of sustained high prices due to potential renewed attacks and slow supply recovery, even if a deal is struck. As reported by The Economic Times, Toshitaka Tazawa, an analyst at Fujitomi Securities, noted that oil prices are likely to remain elevated given the possibility of renewed U.S. attacks on Iran and expectations that, even if a peace deal is reached, crude supply will not quickly return to pre-war levels. The market is now watching whether Trump's comments represent a genuine shift toward de-escalation or just a tactical pause, with how Iran responds to the latest developments being crucial factors for future oil price direction. Despite Trump's assertion to U.S. lawmakers about a quick end to the conflict, his comments on the need to strike again create ongoing market uncertainty about the true trajectory of U.S.-Iran relations.
