Oil Prices Continue Downward Trend Amid Reports of Advancements in Iran Nuclear Talks

Global Oil Prices Fall as US and Iran Reach Agreement to End Conflict

Oil prices declined for a second consecutive day following a statement from US President Donald Trump that significant progress has been made towards reaching a final agreement to end the war with Iran. West Texas Intermediate (WTI) crude futures dropped towards $100 per barrel, after a 3.9% decline on Tuesday, while Brent crude closed near $110.

US efforts to move ships through the Strait of Hormuz will be paused, but a naval blockade will remain in place, according to Trump's statement on Truth Social. This development comes as Brent crude has climbed by more than 50% since the conflict started at the end of February, resulting in the loss of hundreds of millions of barrels of Persian Gulf oil from global markets.

The Strait of Hormuz, a critical chokepoint for oil shipments, has been constrained by a double blockade. Iran has obstructed shipping, while the US has stopped vessels from accessing Iranian ports. The conflict has left over 1,550 commercial vessels, carrying some 22,000 sailors, trapped in the Persian Gulf.

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US Crude Inventories Fall

Meanwhile, industry data showed that US crude inventories fell by 8.1 million barrels last week, which would be the biggest draw since mid-February if confirmed by official data due later this week.

Oil analysts have attributed the wild price swings since the war started to extreme volatility. As a result, traders have moved to the sidelines to avoid such fluctuations. Aggregate open interest in Brent has dropped to its lowest level since August.

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Saudi Arabia Cuts Oil Price

In a separate development, Saudi Arabia reduced the price of its main oil grade for Asia next month, from a record-high in May. This move comes as the hostilities in the Middle East continue to disrupt supplies.

With the conflict showing signs of resolution, oil markets may begin to stabilize. However, analysts warn that irrational exuberance could still drive market fluctuations.