Oil prices declined on Tuesday after President Donald Trump stated that a deal with Iran to reopen the Strait of Hormuz could be reached in 'two or three days,' despite continued violence in the region and no agreement yet finalized [1]. U.S. crude oil futures dropped about 2% to $89.40 by 8:05 a.m. ET, while Brent futures fell 1.7% to $92.65 per barrel [1]. The market's reaction followed a week of heightened tensions, as Iran and Israel exchanged fire, threatening the fragile ceasefire established in April [1].
Earlier in the week, Iran launched missiles at Israel in retaliation for Israeli strikes in Lebanon, prompting Israel to respond with attacks on Iran. President Trump has pressured Israeli Prime Minister Benjamin Netanyahu to avoid further escalation, and both Iran and Israel have since stated that they have ceased fire [1]. The violence briefly spiked oil prices on Monday, but the lack of further escalation led to a subsequent decline [1].
Since the U.S. and Israel attacked Iran on February 28, oil prices have surged approximately 30%. In response, Tehran attacked tankers and mined the Strait of Hormuz, causing a dramatic reduction in traffic and triggering what is described as the biggest oil supply disruption in history [1]. President Trump has attempted to force Iran into a deal by imposing a naval blockade on Iranian ports and vessels [1].
Despite the ongoing blockade and a sharp drop in commercial traffic, JPMorgan analysts estimate that around 2 million barrels per day may still be transiting the Strait of Hormuz on tankers with disabled transponders [1]. Oil industry executives and analysts note that global stockpiles have so far buffered the impact on crude prices, but they warn that prices are likely to spike later in the year as inventories decline and summer demand peaks [1].
CONCLUSION
Oil prices have fallen in the short term as President Trump signals an imminent deal with Iran, but the market remains volatile due to ongoing regional tensions and supply disruptions. Analysts caution that while global stockpiles have moderated price increases, further spikes are likely if inventories dwindle and demand rises later in the year.