Investing.com — Oil prices slipped from multi-year highs on Wednesday, briefly slipping below the $100 a barrel threshold, after President Donald Trump suggested that the U.S. could be pursuing an impending exit from the Iran war. The president also said that the new Iranian regime had asked for a ceasefire.
At 14:51 ET (18:51 GMT), futures contracts expiring in June for , the global benchmark, were down 2.6% to $101.25 a barrel. Following the outbreak of the war in late February, Brent temporarily shot up to as high as roughly $120 a barrel. Prior to the conflict, the contract was exchanging hands at around $70 a barrel.
Meanwhile, futures fell 1.3% to $100.06 a barrel.
Get more oil market insights with InvestingPro -now 50% off
Trump suggests exit in ’two to three’ weeks, says received ceasefire message
Trump on Wednesday said on his Truth Social service that “Iran’s New Regime President, much less Radicalized and far more intelligent than his predecessors, has just asked the United States of America for a CEASEFIRE!”
“We will consider when Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!” the president added.
If confirmed by Iran, this would mark another significant step towards de-escalation, even with uncertainty around the Strait of Hormuz. The critical waterway through which a fifth of the world’s oil and gas supply flows has been effectively shuttered by Iran since the start of the conflict, leading to surging oil prices across the globe.
On Tuesday Trump said Washington could withdraw from the conflict within “two to three weeks,” adding that Iran doesn’t have to make a deal to conclude the conflict.
He also reiterated that negotiations with Iran are going well, a claim that has been frequently disputed by officials in Tehran. However, Iran did acknowledge that messages are being exchanged between both sides, while the country’s president indicated that Iran has the “necessary will” to end the war should it receive guarantees that it will not be attacked again.
The White House said Trump would address the nation on Wednesday to provide an “important update on Iran.”
Earlier this week, a Wall Street Journal report said Trump had told aides that he was willing to stop the U.S. assault on Iran without having largely reopened the Strait of Hormuz,
Strait of Hormuz closure drives Brent to best month on record
The strait is a critical artery for roughly a fifth of global oil supply. Tanker traffic through it has all but collapsed due to the threat of Iranian attacks on vessels, sustaining constant upward pressure on oil prices.
Brent is coming off a record monthly gain, with a whopping 42.7% rise. WTI advanced 51.3% in March, its best month since May 2020.
“(If Trump) were to order a U.S. force withdrawal, it would not necessarily end the attacks by Iran on other Persian Gulf states, nor make vessel traffic through the Strait of Hormuz automatically safe. But Trump also did suggest that the Strait would re-open for traffic ’automatically’ after the U.S.’s withdrawal,” Thierry Wizman, global FX & rates strategist at Macquarie, said.
“Of course, the chain of events still leaves open the question of whether passage through the Strait will be secure once U.S. combat actions end, and how that safe passage will be attained. It is possible that opening the Strait will be left to the mechanism of regional and international diplomacy between Iran and other states,” he said.
“Another question is whether the U.S. can credibly say that it has completed its mission if the Strait does not re-open after the U.S. forces withdraw and in the absence of an agreement or surrender. The answer turns on how much of the U.S.’s military goal of neutralizing Iran’s ability to threaten its neighboring states has been accomplished,” Wizman added.
U.S. crude stocks surge against expectations of a draw – API
Elsewhere, data from the American Petroleum Institute showed U.S. crude inventories rose by 10.26 million barrels last week, sharply above expectations for a 1.3 million-barrel draw and compared with a prior build of 2.3 million barrels, pointing to weaker demand.
American Petroleum Institute CEO Mike Sommers on Tuesday underscored the structural risk to supply.
Sommers said reopening the strait was “the critical piece” to stabilise global markets, warning that without restored flows, oil prices would continue rising across major consuming regions.
Ayushman Ojha and Scott Kanowsky contributed to this article