The price of Brent crude dropped to $105 per barrel on Wednesday amid ongoing peace talks aimed at de-escalating tensions in the Middle East.
According to data from Oilprice.com, Brent fell by $6, down from $111 on Tuesday, while WTI eased to $98 from $105 the previous day.
The decline came after US President Donald Trump said that negotiations with Iran were in the final stages, though investors remain wary about the outcome of the peace talks as disruption to Middle Eastern supply continues.
According to Reuters, Trump said negotiations with Iran were in the final stages but warned of further attacks unless Iran agrees to a deal.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei said Iran was ready to develop protocols for safe shipping traffic in cooperation with other coastal states without providing further details.
Despite signs of progress, some market participants and analysts remain cautious about the outcome of negotiations and global supply tightness, which is expected to persist even if the US and Iran reach a deal.
Some analysts said they expect Brent crude to rise to $120 per barrel in the near term, stating that oil markets are underpricing the risk of prolonged supply disruption.
Energy data firm Wood Mackenzie estimated crude oil could approach $200 if the Strait of Hormuz remains largely shut until the end of the year.
Meanwhile, three supertankers crossed the Strait of Hormuz on Wednesday carrying oil bound for Asian markets after waiting in the Gulf for more than two months with 6 million barrels of Middle East crude on board, while another vessel was entering, Reuters reports, quoting shipping data from LSEG and Kpler.
The ships were among a handful of supertankers exiting the Gulf this month via a transit route that Iran has ordered ships to use.
The US-Israel war on Iran, which began on February 28, has severely curtailed shipping through the Strait of Hormuz, through which around one-fifth of the world’s oil and energy supply normally flows.
It was reported that the South Korean-flagged Very Large Crude Carrier Universal Winner, carrying 2 million barrels of Kuwaiti crude loaded on March 4, was exiting the strait following the departure of two Chinese tankers on Wednesday, the data showed. Kpler data showed the tanker is heading to Ulsan, where the country’s largest refiner, SK Energy, is located, to discharge its cargo on June 9.
Before the war began, shipping traffic through the strait averaged 125 to 140 daily passages, while about 20,000 seafarers remained stranded inside the Gulf aboard hundreds of ships.
Shipping traffic has since averaged about 10 vessels entering and exiting the strait in recent days, including cargo vessels and other ships such as chemical and liquefied petroleum gas tankers, with crude oil tankers still representing a small proportion of total traffic, according to Reuters analysis based on ship-tracking data.
About 10 ships crossed the strait in the past 24 hours, including small cargo vessels and a chemical tanker entering the Gulf, according to data from Kpler and satellite analysis from data analytics specialists SynMax.
The NGGOSSIPS reports that a continued drop in oil prices could lead to lower fuel prices.
