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U.S. oil futures dropped by more than $2 on Wednesday morning following President Donald Trump’s announcement that the military operation to reopen the Strait of Hormuz would be temporarily halted to facilitate a potential diplomatic agreement.
West Texas Intermediate (WTI) fell 2.18% to $100.04 per barrel as markets reacted to the possibility of a finalised and signed deal.
This decline continues a downward trend from Tuesday, when prices fell roughly 4% as a fragile ceasefire remained intact.
While the operation to clear the shipping chokepoint is on hold, the U.S. blockade remains in full effect to maintain pressure during negotiations.
This shift in geopolitical tension overshadowed recent data from the American Petroleum Institute, which indicated that U.S. crude inventories fell by 8.1 million barrels for the week ending May 1.
Gasoline and distillate stocks also saw significant decreases, falling by 6.1 million and 4.6 million barrels, respectively.
