WASHINGTON — Oil prices fell sharply Wednesday after reports suggested the United States and Iran were nearing a possible agreement to end the Gulf conflict, easing concerns about prolonged disruption in the Strait of Hormuz.
West Texas Intermediate, the U.S. benchmark, dropped as much as 10 percent in early trading before recovering slightly to around $94.32 a barrel, according to Business Insider. Brent crude, the international benchmark, fell 7 percent to about $102.14 a barrel.
The New York Times reported that Brent later traded around $103 a barrel, while WTI was near $96 as investors reacted to signs that tensions in the Gulf could be easing.
The price decline followed a report from Axios that Washington and Tehran were close to agreeing on a one-page memorandum of understanding aimed at ending the conflict, which began in late February. The report said major progress could come within 48 hours.
President Donald Trump said the U.S. was pausing “Project Freedom,” a naval operation launched earlier in the week to escort commercial ships through the Strait of Hormuz. The Wall Street Journal reported that the operation had triggered new Iranian attacks on merchant ships and U.S. naval vessels in the region.
“Assuming Iran agrees to what has been agreed to, which is, perhaps a big assumption, the already legendary Epic Fury will be at an end, and the highly effective Blockade will allow the Hormuz Strait to be open to all, including Iran,” Trump wrote on Truth Social.
Trump also warned Tehran that “if they don’t agree, the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before”.
Despite the market optimism, tensions in the Gulf remained elevated. The Wall Street Journal reported that ships attempting to cross the Strait of Hormuz on Wednesday received warnings from Iran’s Revolutionary Guard navy that the waterway remained blocked.
China also entered the diplomatic push. The New York Times reported that Chinese Foreign Minister Wang Yi met with Iranian Foreign Minister Seyed Abbas Araghchi in Beijing and urged Tehran to help stabilize the region. China remains one of the largest buyers of Iranian crude oil.
The conflict has driven up fuel costs in recent weeks. The New York Times reported that average gasoline prices in the United States rose to $4.54 a gallon, while diesel prices climbed to $5.67 a gallon after the conflict began. (Source: IANS)
