Oil Falls on US Diplomatic Push

WTI crude oil futures dropped more than 6% to $86.8 per barrel on Wednesday as US diplomatic efforts to end the war with Iran gained traction, overshadowing reports of additional troop deployments and the near-closure of the Strait of Hormuz. The US reportedly drafted a 15-point plan delivered to Iran via Pakistan to help resolve the conflict, while around 2,000 soldiers from the 82nd Airborne Division were deployed to the region to support security at the vital waterway. Iran signaled little willingness to compromise, firing missiles at Israel and ruling out ceasefire talks, while allowing some foreign ships to transit the strait under restrictions. The crisis has intensified global energy pressures, with Chevron warning of a potential California fuel crisis, hundreds of fuel shortages reported in Australia, the Philippines declaring a national energy emergency, and Asian nations reportedly hoarding jet fuel.

WTI crude futures dropped about 3% toward $89 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.