Oil Prices Plunge as U.S. and Iran Near Peace Deal

CNBC reported Wednesday that oil prices plunged sharply after Axios said Washington and Tehran were approaching a formal agreement to end their ongoing conflict. Brent crude tumbled roughly 8% to around $100 per barrel. U.S. West Texas Intermediate fell nearly 10% to just above $92.

Peace Framework Takes Shape

Axios, citing four sources including two U.S. officials, said the White House believes it is nearing a one-page, 14-point memorandum of understanding. The document would end the war and establish a foundation for broader nuclear discussions. Washington reportedly expects Tehran to respond on several key points within 48 hours.

A spokesperson for Iran’s foreign ministry told CNBC directly that the country was “evaluating” the American proposal. Iran separately signaled it would only accept terms it considered fair. The White House had not commented by the time of publication.

Trump Pauses Hormuz Escort Mission

President Donald Trump announced via Truth Social on Tuesday that the U.S. was suspending “Project Freedom,” a military escort operation for commercial shipping through the Strait of Hormuz. The initiative had launched just one day earlier. Trump cited forward movement in negotiations as the reason for the pause.

The Trump administration has said roughly 23,000 sailors aboard vessels from 87 nations remain stranded in the Persian Gulf following Iran’s effective closure of the strait since late February.

Why the Strait Matters So Much

The Strait of Hormuz is one of the world’s most critical oil chokepoints, handling a significant share of global seaborne crude exports. Warren Patterson, head of commodities strategy at ING, said in a research note that normalizing flows through the waterway was essential. He warned that roughly 13 million barrels per day of disrupted supply was currently being absorbed by inventories. Those stockpiles, he noted, were declining at a rapid pace, leaving markets increasingly exposed.

Also Read: ING Commodities Outlook

Demand Destruction Already Spreading

Even before Wednesday’s report, the prolonged supply shock was rippling through the global economy. Nicolo Bocchin, co-head of fixed income at Azimut Group, cautioned that elevated energy costs were already suppressing demand worldwide. He added that even a full reopening of the strait would require weeks before shipping and trade patterns returned to anything resembling normal.

Both oil benchmarks had already settled more than 3.9% lower in Tuesday’s session before Wednesday’s further leg down, underscoring how quickly sentiment shifted on the diplomatic headlines.

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