Oil Falls on US Diplomatic Push

WTI crude futures dropped about 5% to below $88 per barrel on Wednesday, reversing the previous session’s gains amid reports that Washington was pursuing diplomatic efforts to end the war with Iran. Israeli media indicated that the US was seeking a one-month ceasefire to facilitate talks, while the New York Times reported that Washington had sent Iran a 15-point proposal to resolve the conflict. These developments outweighed concerns over further Middle East escalation after President Donald Trump ordered the deployment of roughly 2,000 troops to the region, as the administration considered options to loosen Iran’s control over the Strait of Hormuz. On Tuesday, oil prices had risen about 5% after Tehran denied engaging in negotiations with the US and signaled it had no intention of restoring normal shipping conditions in the Strait, while US allies such as Saudi Arabia and the United Arab Emirates expressed readiness to join the conflict against Iran.

WTI crude oil futures rose 5% to around $92.4 per barrel on Tuesday, recovering part of the sharp 10.3% drop seen in the previous session, though gains were more limited as markets remained volatile. Oil moved higher in choppy trading as investors weighed escalating geopolitical tensions. US allies including Saudi Arabia and the United Arab Emirates have taken a firmer stance against Iran following attacks on their territories, with reports suggesting Riyadh could consider military action if its infrastructure is targeted. There are also signs Gulf states may move closer to joining the conflict, which would mark a major escalation. Meanwhile Iran signaled it does not intend to restore normal conditions in the Strait of Hormuz and ruled out negotiations with Washington, although diplomatic efforts continue with regional ministers holding talks in Riyadh.

WTI crude futures climbed toward $91 per barrel on Tuesday, recovering some losses from the previous session as Iran pushed back against President Donald Trump’s claims, denying any talks to end the conflict. Tehran dismissed Trump’s announcement as an attempt to influence financial markets and launched new attacks on US targets, while Israel continued strikes against Iran. On Monday, the US oil benchmark had plunged about 10% after Trump postponed planned strikes on Iranian energy infrastructure for five days and said productive talks were ongoing. The delay was seen as an effort to stabilize oil prices, with Trump noting they would “drop like a rock” once a deal is reached. The outcome of any talks and the potential reopening of the Strait of Hormuz remain highly uncertain, keeping markets cautious. The conflict has effectively shut the critical global chokepoint through which roughly 20% of the world’s oil flows, forcing Middle Eastern producers to sharply reduce output.