TLDR
- Brent crude dropped 1.4% to $92.92 and WTI fell 1.9% to $89.57 after Iran and Israel said they halted attacks
- Trump told reporters a deal could come “one or two days from now” and predicted “total victory” within two weeks
- The Strait of Hormuz remains blocked by both Tehran and Washington, cutting off global oil and gas supplies
- China’s crude imports fell 29% last month to their lowest level in over eight years
- One analyst says prices need to be “firmly in triple digits” to reflect depleted global stockpiles
Oil prices dropped on Tuesday after Iran and Israel said they had stopped attacking each other, following a push from U.S. President Donald Trump to de-escalate the conflict.
Brent crude fell 1.4% to $92.92 a barrel. West Texas Intermediate dropped 1.9% to $89.57. The declines wiped out most of Monday’s gains, which had been driven by renewed Israeli strikes on Iran and attacks in Lebanon over the weekend.
Trump told reporters in New York on Tuesday that a deal could be close. “We’re in the final throes of what will be a very, very good deal,” he said, adding that clarity could come within one or two days. He also said the U.S. would declare “total victory” in the war within two weeks.
Israeli Prime Minister Benjamin Netanyahu said Israel is holding fire for now but will respond if Iran attacks again. Iranian media carried similar warnings from Tehran’s side.
Strait of Hormuz Still Closed
Despite the pause in hostilities, the Strait of Hormuz remains blocked. Before the war, the strait carried about a fifth of the world’s crude oil and liquefied natural gas. Tehran has blocked most shipping through it, and Washington has imposed its own blockade on Iranian ports.
On Monday, U.S. forces disabled an oil tanker in the Gulf of Oman after it tried to sail to an Iranian port in violation of the blockade. Israel’s military also intercepted a suspicious aerial target from Yemen.
Analysts warn that even if a peace deal is reached, getting oil flows back to normal will take time. Mines in the Hormuz strait would need to be cleared. Shut-in oil fields could take months to restart. Damage to energy infrastructure from drone and missile strikes also needs to be repaired.
China’s Imports Drop Sharply
China’s crude oil imports fell 29% last month to their lowest level in more than eight years. In April, imports had already dropped to around 9.3 million barrels per day, down from an average of 11 million barrels per day before the conflict began. China has been leaning on its stockpiles and cutting refinery output instead of buying replacement barrels.
PVM Oil Associates analyst Tamas Varga said global oil inventories are depleting. He warned that as data on stockpile levels becomes available, the realization of “dangerously low” oil stocks could push Brent back above $100.
Al Salazar, head of oil and gas research at Enverus, described oil as “headline driven” right now. He said prices still need to reach triple digits to fully reflect how depleted global stock levels have become.
A fragile ceasefire is in place, but both sides have left the door open to resumed hostilities.
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