TLDR
- Oil prices fell about 1–2.5% on Wednesday after Trump said the Iran war could end “very quickly”
- Brent crude dropped to around $109 and WTI fell near $102 per barrel
- Two Chinese supertankers exited the Strait of Hormuz, raising hopes for improved supply flows
- U.S. crude inventories fell for a fifth straight week, with a surprise 9.1 million barrel draw
- Analysts at Citi expect Brent to rise to $120 a barrel in the near term, warning markets are underpricing supply risk
Oil prices fell by roughly 1–2.5% on Wednesday as markets reacted to signs of progress in U.S.-Iran peace talks. Traders are watching closely, but analysts say supply risks remain high despite the diplomatic optimism.
Brent crude futures dropped to around $109 per barrel and U.S. West Texas Intermediate fell to near $102. Both contracts had also slipped about 1% the day before after Vice President JD Vance said talks were advancing.
President Donald Trump told lawmakers Tuesday evening that the Iran war could end “very quickly.” He had earlier confirmed he postponed a planned U.S. strike on Iran and said negotiations with Tehran were going well.
"We're going to end that war very quickly. They want to make a deal so badly. They're tired of this"
President Trump predicts a deal to end the war with Iran is going to happen "fast" — and that oil prices will plummet when the agreement is reached. pic.twitter.com/Q0t8Bp8RWx
— Fox News (@FoxNews) May 19, 2026
Iran’s latest peace proposal called for an end to hostilities on all fronts, the withdrawal of U.S. forces from the region, and war reparations. The U.S. largely rejected earlier Iranian offers, maintaining that ending Iran’s nuclear program is a key condition of any deal.
Tankers Moving Again Through the Strait of Hormuz
Two Chinese-flagged supertankers carrying oil exited the Strait of Hormuz on Wednesday. A South Korean-flagged vessel was also making its way out after waiting more than two months with 6 million barrels of Middle Eastern crude on board.
The waterway has been effectively closed to tanker traffic since the U.S.-Israeli war on Iran began in late February. The number of ships crossing the strait remains well below the roughly 130 that did so daily before the conflict.
Despite the tanker movement, analysts at LSEG cautioned that supply will likely not return to pre-war levels quickly, even if a peace deal is reached.
Citi said on Tuesday it expects Brent crude to rise to $120 a barrel in the near term. The bank said oil markets are underpricing the risk of a prolonged supply disruption.
U.S. Inventories Drop Sharply
U.S. crude stockpiles have fallen for five straight weeks. Data from the American Petroleum Institute showed a 9.1 million barrel draw last week, far above the 3.4 million barrel draw that analysts had expected.
Official U.S. inventory data from the Energy Information Administration was due later on Wednesday and was expected to show a similar trend.
Trump has ordered the release of 172 million barrels of oil from the Strategic Petroleum Reserve to ease supply shocks from the conflict.
PVM analysts warned that global oil stocks could reach critically low levels. They noted that market players have appeared relatively calm given the severity of the supply disruption.
The premium on Brent contracts for near-term delivery over six-month contracts sits around $21 per barrel — well below last month’s high of over $35.
In another sign of tightening supply, Britain loosened sanctions to allow imports of diesel and jet fuel refined from Russian crude.
Markets are pricing in some diplomatic progress, but analysts continue to warn that supply disruptions could deepen before any deal takes hold.
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