Oil Falls 5% After Signals of Strait of Hormuz De-escalation
Oil prices fell sharply on Wednesday (March 25th) after signs of a de-escalation in the Strait of Hormuz, amid claims by US President Donald Trump that Washington and Tehran were “in negotiations,” although Iran continued to deny any direct talks. The decline in oil reflected a market that quickly “reduced” risk premiums when there were indications that shipping could resume—albeit conditionally.
Brent futures fell 5.5% to $98.72/barrel, while WTI fell 5.1% to $87.65/barrel. From the Oval Office, Trump said he was backing off threats to attack Iran’s energy infrastructure “because we’re negotiating.” Trump also called Iran “reasonable” when asked about the change in stance.
On Tuesday evening, The New York Times reported that the US had submitted a 15-point proposal to end the war, citing two anonymous officials. The proposal was reportedly sent through Pakistan, but it remains unclear how widely the document has circulated among Iranian officials, and whether Israel—which has joined the US in the attacks on Iran—will support it.
Meanwhile, a spokesman for Iran's joint military command warned that oil markets would remain volatile and said prices would not return to normal until regional stability is achieved under its military control, according to Reuters. Meanwhile, Iran's mission to the UN stated that "non-hostile" vessels could pass through Hormuz, provided they coordinate with the appropriate Iranian authorities. This statement hints at a protocol that has begun to take shape in recent days, with some vessels from China, India, and Pakistan reportedly able to pass through the waterway—as Iran demonstrates its control over the strait.
The Middle East crisis has severely disrupted oil exports through Hormuz since the US and Israel launched attacks on Iran on February 28. The waterway typically carries about a fifth of global oil and LNG flows and serves as a key chokepoint for the fertilizer trade. With the emerging "conditional opening" signal, market participants are now reassessing how long the supply disruptions will last—and whether diplomatic measures are truly leading to stabilization.
Newsmaker's key takeaway: Oil prices corrected sharply as the market saw the possibility of improved shipping flows in Hormuz, albeit still subject to Iranian regulations. As long as the status of negotiations remains unclear and access to Hormuz remains "selective," volatility is expected to remain high, and prices will fluctuate easily following headlines.
Source: newsmaker.id
