Oil prices fell about 3% on Wednesday, with Brent crude dropping to a five-week low as investors grew more optimistic that the United States and Iran could still reach a diplomatic agreement despite ongoing military tensions around the Strait of Hormuz.
Brent crude futures declined to around $96.6 per barrel after recent gains driven by fears of supply disruptions from the Gulf region.
The market reaction followed comments from U.S. Secretary of State Marco Rubio, who said negotiations between Washington and Tehran were still ongoing and that a potential agreement could take several more days to finalize.
The easing in prices came despite continued hostilities near the Strait of Hormuz, the world’s most critical oil shipping chokepoint through which roughly one-fifth of global oil and liquefied natural gas flows pass.
U.S. forces reportedly struck targets near the strait, while Iran’s Revolutionary Guard said it had fired at several U.S. aircraft entering Iranian airspace, keeping geopolitical risks elevated.
Although the waterway remains effectively restricted amid military activity and blockades by both sides, traders took some comfort after two non-Iranian supertankers successfully exited the strait on Tuesday, marking the first significant movement of unrestricted crude cargoes in nearly a week.
Oil markets have remained highly volatile in recent sessions, swinging sharply on developments surrounding the Gulf crisis as traders assess the risks of a prolonged disruption to global energy supplies.
Analysts said the latest decline reflected growing expectations that diplomacy could still prevent a wider regional conflict, even as military operations continue in the area.
Higher oil prices in recent weeks have renewed concerns over global inflation and energy security, particularly for major Asian economies heavily dependent on Gulf crude exports.
