Crude oil prices moved lower on Wednesday, extending losses from the previous session as investors weighed the possibility of renewed supply flows from the Middle East alongside ongoing geopolitical developments.
The decline comes after recent highs driven by supply disruptions, with markets now reassessing the outlook amid diplomatic progress between the United States and Iran.
Brent crude futures for July were trading around $107.85 per barrel, down 2.34%, while US West Texas Intermediate (WTI) crude futures for June fell 1.78% to approximately $100.45 per barrel in early trade.
Oil prices came under pressure after indications from US President Donald Trump that a potential peace agreement with Iran may be within reach. The development has raised expectations that restricted oil supplies from the region could gradually return to global markets.
Trump also stated that operations to escort commercial shipping through the Strait of Hormuz would be temporarily paused, citing progress in negotiations. However, the US Navy is expected to maintain its blockade of Iranian ports.
The Strait of Hormuz remains a critical energy corridor, accounting for roughly one-fifth of global oil and natural gas shipments. Any easing of disruptions in this region could significantly improve supply conditions.
In recent weeks, crude prices had surged amid supply concerns triggered by tensions in the Middle East. The partial disruption of flows through the Strait of Hormuz had tightened global inventories and pushed Brent prices to their highest levels since March 2022.
Despite the recent decline, underlying supply risks remain, as geopolitical uncertainties have not been fully resolved.
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Supporting the broader market, US crude oil inventories declined for the third consecutive week, indicating firm demand conditions.
According to market sources citing industry data, crude stockpiles fell by 8.1 million barrels in the week ended May 1. Additionally, gasoline inventories dropped by 6.1 million barrels, while distillate stocks declined by 4.6 million barrels.
The drawdown in inventories highlights continued consumption strength, which may limit the downside in oil prices despite improving supply expectations.
Oil markets are expected to remain volatile as traders monitor further developments surrounding the potential Iran deal and the status of supply routes in the Middle East.
While easing geopolitical tensions could increase supply, any setbacks in negotiations or escalation in the region may quickly reverse the current trend.
Crude oil prices are currently balancing between expectations of improved supply from a potential Iran agreement and underlying demand strength reflected in declining US inventories. Market direction in the near term will largely depend on geopolitical developments and clarity on supply restoration.
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Published on: May 6, 2026, 7:41 AM IST
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