Crude oil prices fell more than 2% during early Asian trade on Tuesday (May 19, 2026) as investors reacted to signs of possible de-escalation in tensions between the United States and Iran.
Market sentiment improved after US President Donald Trump stated that he had postponed a planned military strike on Iran to allow additional time for negotiations aimed at ending the conflict in the Middle East.
Despite the decline in prices, traders remained cautious as geopolitical tensions in the region continue to pose significant risks to global energy supplies and shipping routes.
Brent crude futures for July delivery dropped $3.01, or 2.7%, to trade near $109.09 per barrel during early trading hours.
US West Texas Intermediate (WTI) crude for June delivery declined $1.38, or 1.3%, to $107.28 per barrel.
The more actively traded July WTI contract fell $2.06, or 2%, to around $102.32 per barrel.
Both benchmarks had touched their highest levels in several weeks during the previous session amid fears of escalating conflict in the Middle East.
President Donald Trump stated on Monday that there was a “very good chance” of reaching an agreement with Iran to prevent Tehran from developing a nuclear weapon.
The comments came shortly after the White House announced a temporary pause in planned military action to provide room for diplomatic negotiations.
The development helped ease immediate fears of direct military confrontation, which had previously driven oil prices sharply higher.
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Despite signs of diplomatic engagement, concerns over supply disruptions remain elevated due to the ongoing conflict in the Middle East.
The Strait of Hormuz, one of the world’s most critical oil shipping routes, has effectively faced major disruptions amid the tensions. The waterway carries nearly one-fifth of global oil supplies, making any interruption a major concern for energy markets.
Market participants are closely monitoring tanker movements and regional military activity for further indications of supply risks.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei confirmed that Tehran’s position had been conveyed to the United States through Pakistan, although no specific details were disclosed.
A Pakistani official reportedly stated that Islamabad had facilitated a fresh proposal between both sides, though progress in negotiations remained slow.
Meanwhile, reports suggesting that the United States may temporarily waive sanctions on Iranian oil exports during negotiations were denied by a US official.
In the United States, the Energy Department reported a record drawdown of 9.9 million barrels from the Strategic Petroleum Reserve last week.
The draw brought total stockpiles down to nearly 374 million barrels, marking the lowest level since July 2024.
The sharp decline in reserves has added to concerns about tightening global oil supplies amid continuing geopolitical uncertainty.
International Energy Agency (IEA) chief Fatih Birol stated that commercial oil inventories were falling rapidly due to disruptions in shipping and heightened geopolitical risks.
According to the IEA, current inventories suggest that only a few weeks of supply remain available if disruptions intensify further.
Crude oil prices remain highly sensitive to geopolitical developments in the Middle East, particularly surrounding negotiations between the United States and Iran. While Trump’s decision to delay military action has temporarily eased market fears, concerns over supply disruptions and shipping constraints continue to keep energy markets volatile.
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Published on: May 19, 2026, 8:26 AM IST
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