Brent Falls More than 10% as Trump Delays Iran Strikes

Brent crude oil futures were little changed at around $106 per barrel on Wednesday, after a 7.5% rally over the previous three sessions as Middle East tensions and shrinking global inventories continued to support prices. The IEA said observed oil stockpiles fell by around 4 million barrels per day in March and April, while Saudi Arabia told OPEC its production dropped to the lowest level since 1990. The IEA warned that with inventories already falling at a record pace, further volatility is likely ahead of peak summer demand and that the market could remain severely undersupplied until October even if the conflict ends next month. Meanwhile, US government data showed distillate inventories rose by 190,000 barrels last week, the first increase since March, easing some supply concerns. However, crude inventories fell by 4.3 million barrels, nearly double market expectations.

Brent crude oil futures trimmed earlier losses and steadied around $108 per barrel on Wednesday, after a 7.5% rally over the previous three sessions. The move followed the International Energy Agency’s warning that global observed oil inventories fell at a record pace of around 4 million barrels per day in March and April. The IEA said in its Oil Market Report that with inventories already drawing sharply, further volatility is likely ahead of the peak summer demand season, and that the market could remain severely undersupplied until October even if the conflict ends sooner. Middle East tensions continue to disrupt flows, with Asian refiners including Japan seeking alternatives to Persian Gulf supplies. Meanwhile, reports suggest Iranian export shipments have recently stalled, marking the first sustained interruption since the conflict started. US President Donald Trump said the situation remains under control, downplaying concerns ahead of talks with China’s Xi Jinping.

Brent crude futures fell below $107 per barrel on Wednesday, snapping a three-day rally, although the prolonged conflict in the Middle East and the continued near-closure of the crucial Strait of Hormuz squeezed global energy supplies. Efforts to broker an end to the US-Iran war have yet to produce meaningful progress, while the fragile ceasefire remained at risk after Washington dismissed Tehran’s latest response to a proposed peace framework. Hormuz continues to face restrictions from both US and Iranian forces, remaining a major obstacle in negotiations and disrupting substantial flows of crude, natural gas, and fuels. Meanwhile, President Donald Trump is expected to meet Chinese President Xi Jinping this week, though Trump indicated that trade negotiations would take precedence over developments surrounding the Iran conflict. Separately, US inflation accelerated more than expected in April as surging energy prices linked to the Middle East crisis added to price pressures.