Global oil prices dropped sharply on Wednesday, falling by around 4 per cent amid growing expectations of a potential ceasefire in the Middle East that could ease supply disruptions from the key energy-producing region.
Brent crude futures declined by $4.89, or 4.7 per cent, to $99.60 per barrel, after earlier touching a low of $97.57. Meanwhile, US West Texas Intermediate (WTI) crude fell $3.54, or 3.8 per cent, to $88.81 per barrel, having dipped as low as $86.72 during trading. The decline came after both benchmarks had surged nearly 5 per cent a day earlier, reflecting continued volatility in the market.
Analysts attributed the price drop to rising optimism about diplomatic efforts to end the conflict.
Donald Trump said the United States was making progress in negotiations with Iran, with reports indicating that Washington had presented a 15-point proposal aimed at ending the war. The plan reportedly includes provisions such as halting Iran’s nuclear programme, ending support for proxy groups, and reopening the Strait of Hormuz.
Despite the optimism, market participants remain cautious. Analysts warn that uncertainty surrounding the success of negotiations could keep prices fluctuating in the near term. The ongoing conflict has already severely disrupted oil and liquefied natural gas shipments through the Strait of Hormuz, a critical route that typically carries about one-fifth of the world’s energy supply.
Additional pressure on prices came from rising US fuel inventories. Industry data showed increases in crude, gasoline, and distillate stocks last week, further weighing on market sentiment.
While a ceasefire could restore supply flows, experts caution that it may take time for production and shipments to fully normalise, especially without clarity on the durability of any agreement.
