Oil Drops Below $100 as Trump Claims Iran Deal Is Near
CNBC reported Wednesday that President Donald Trump told reporters the United States is in the “final stages” of diplomatic negotiations with Iran, sending oil prices sharply lower in afternoon trading.
Oil Prices Iran Deal Hopes Trigger Sharp Selloff
West Texas Intermediate futures dropped more than 6% on the day, sliding to $97.74 per barrel. International benchmark Brent crude also shed nearly 6%, falling to $104.62 per barrel. Both benchmarks had been trading at elevated levels amid ongoing Strait of Hormuz tensions.
Trump separately indicated he had postponed a fresh round of military strikes against Iran earlier this week. He cited requests from Gulf Arab allies, who urged Washington to allow more time for a diplomatic resolution before any escalation.
Background: Hormuz Standoff Has Rattled Energy Markets
The conflict has created a prolonged standoff with severe consequences for global energy supply. Iran has blockaded the Strait of Hormuz, one of the world’s most critical chokepoints for oil and gas transit. Washington has responded by blocking Iranian ports, leaving both sides deadlocked for weeks.
Analysts have repeatedly warned that the standoff carries substantial downside risk. Citibank cautioned clients Tuesday that markets are underestimating how long Hormuz disruptions could last. The bank projected Brent could rise as high as $120 per barrel in the near term. Citi analysts wrote that an extended Iranian disruption to Strait of Hormuz flows appears increasingly likely in their view.
Energy consultancy Wood Mackenzie offered a far grimmer scenario. Its analysis published Wednesday suggested prices could approach $200 per barrel if the strait remains closed through year-end. That figure represents a worst-case outcome the firm did not treat as its base case.
What a Deal Could Mean for Crude
The flip side of that analysis is equally striking. Wood Mackenzie projected that a swift peace agreement reopening Hormuz by June could push Brent spot prices back down to around $80 per barrel by late 2026. That outcome would represent a dramatic reversal from current levels.
Trump has made upbeat statements about an Iran agreement before, only for tensions to resurface and prices to climb again. Markets appeared cautiously optimistic Wednesday, though traders remain wary of the pattern of diplomatic optimism followed by fresh escalation.
The scale of Wednesday’s price move reflects just how sensitive crude markets have become to every signal out of Washington and Tehran.
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