Ammon News - Oil prices fell for a second day on Wednesday on expectations bottled-up supply from the key Middle East producing ​region could resume flowing after U.S. President Donald Trump indicated a possible peace deal may ‌be reached to end the war with Iran.

Brent crude futures fell $1.89, or 1.7%, to $107.98 a barrel as of 0340 GMT, after dropping 4% in the previous session. U.S. West Texas Intermediate futures eased $1.83, or 1.8%, to $100.44, after settling down 3.9% the day before.

On Tuesday, Trump unexpectedly ​said he would briefly pause an operation to help escort ships through the Strait of Hormuz, citing ​progress toward a comprehensive agreement with Iran, without giving details on the agreement. There ⁠was no immediate reaction from Tehran.

"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 research ​specialist for oil at LSEG.

Pham added that prices remain elevated with both Brent and WTI staying above $100 per barrel as prospects for a peace deal remain uncertain, while it will take time for trade flows to be fully restored even ​if a deal is reached.

Trump said the U.S. Navy would continue its blockade of Iranian ports. The ​supply loss to the global market has pushed prices higher with Brent trading last week at its highest since March ‌2022.

"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.

Trump's announcement came only hours after U.S. Secretary of State Marco Rubio briefed reporters ​on the effort, announced ​on Sunday, to escort ⁠stranded tankers through the strait. On Monday, the U.S. military said it had destroyed several Iranian small boats, as well as cruise missiles and drones, while guiding ​two vessels out of the Gulf through the strait.


Reuters