Oil prices tumbled Wednesday for the third straight day, as a flurry of headlines from the Middle East sparked renewed optimism in global markets. As of early Wednesday morning, U.S. crude oil had fallen more than 1.5% to around $81 per barrel and had earlier slipped as low as $79 per barrel for the first time since Aug. 13. International oil benchmark Brent was also down around 2% and trading at just under $86 per barrel.
Driving the moves in oil were a trio of headlines over the past 24 hours that, taken together, could signal a shift in how both Tehran and Washington are approaching the war after six months. The first development was the renewal of talks between Iran and Oman about reopening the critical Strait of Hormuz, reported by . State Department is also preparing to return American diplomats to their posts at embassies across the Middle East, according to The New York Times.
And Secretary of State Marco Rubio told U.S. allies that the Trump administration does not expect to resume military strikes on Iran, according to comments reported by Axios. Paul Donovan, the global chief economist for UBS Wealth Management, sounded a cautiously optimistic note. Further boosting the sentiment around Iran were comments from President Donald Trump’s comment Tuesday on social media.
The timing of the post raised eyebrows, however, because the text mirrors a Trump post from Aug. 18, when he wrote that “all water mines have been removed or detonated.” Shipping analytics firm Kpler on Wednesday reported that “Strait crossings remain subdued.” The firm assessed that just five vessels had transited the Strait on Tuesday, which was down from seven on Monday and nine on Sunday. These figures represent just a tiny fraction of the pre-war daily average of 130 vessels. The falling price of crude this week is the latest twist in what has been a roller coaster ride of a year for oil markets.
Both WTI and Brent crude futures are down a total of 9% since Sunday. After soaring to more than $110 per barrel in early April, U.S. crude oil dropped to the low $80s by the middle of that month before rebounding again to more than $100. By the end of May, crude oil prices had come down into the $80s.
But it was the ceasefire announcement in mid-June that pushed oil prices down further, to near pre-war levels of around $70 a barrel for WTI crude. But these low prices did not last long. Throughout July, the lack of progress in U.S.-Iran negotiations and renewed U.S. strikes on Iran pushed prices back up.
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