Crude slides amid Iran-US ceasefire speculation

Oil prices crashed on Wednesday after Iranian state television broadcast details of a proposal to extend Iran’s ceasefire with the US and reopen the Strait of Hormuz, raising hopes of a deal.

According to the report, an agreement had not been finalised, but if a memorandum of understanding were agreed upon, Iran would restore shipping through the strait to prewar levels within a month.

It added that the US would also lift a naval blockade on Iranian ports. However, the White House called the Iranian report a “complete fabrication”.

The US Rapid Response 47 said on X, “This report from Iranian-controlled media is not true, and the MOU they ‘released’ is a complete fabrication. Nobody should believe what Iranian state media is putting out.”

In different social media posts, US President Donald Trump said, “We can make a good deal right now, but maybe not a great deal — and if it’s not a great deal, we’re not making it.”

He added, “They’re starting to give us the things that they have to give us — and if they do, that’s great, and if they won’t, then (we’re) going to finish them off.”

Trump added that under any deal, the Strait of Hormuz, through which a fifth of the world’s oil flowed before the war, “needs to be open to everybody . . . nobody is going to control it”.

Brent crude, the international oil benchmark, was down almost 5 per cent at $95 a barrel on Wednesday, after days of volatile trading on conflicting signals about progress in the negotiations.

There were previous reports that under the terms of the draft proposal, the current tenuous ceasefire would be extended by 60 days, during which the strait would gradually be reopened as Iran cleared mines, and the US and Tehran would hold talks on the Islamic Republic’s nuclear programme.

Iran and the US have been edging closer to a deal for days, with Trump signalling over the weekend that Washington and Tehran were close to an agreement.

But he later said he had told US negotiators “not to rush into a deal” with Iran, saying “both sides must take their time and get it right”.

Oil prices rebounded on Tuesday after the United States carried out what it described as defensive strikes in southern Iran, raising fresh concerns over the fragile ceasefire and ongoing peace talks between Washington and Tehran.

The strikes came amid expectations that both countries were nearing an agreement to end the three-month war and reopen the Strait of Hormuz for the free movement of oil shipments.

From about $97 per barrel on Monday, global benchmark Brent crude futures rose by roughly 3.5 per cent on Tuesday to around $100 per barrel. However, Brent crashed to $95 a barrel on Wednesday amid hope that the MoU would push through to reopen the Strait of Hormuz.

The war, which began with US and Israeli strikes on Iran exactly three months ago, has triggered a major oil supply shock, increasing the costs of fuel, fertiliser, and food globally. Iran had responded to the attacks by launching drones and missiles at Gulf states hosting US military bases.

Traffic through the Strait of Hormuz, which accounts for about one-fifth of global oil and liquefied natural gas trade, has remained significantly below normal levels since the conflict began.