Oil prices declined sharply on Wednesday amid conflicting developments in US-Iran relations and easing concerns over supply disruptions in the Middle East. Brent crude futures fell $3.11, or 3.12 percent, to $96.47 a barrel by 0913 GMT, while US West Texas Intermediate (WTI) crude dropped $3.64, or 3.88 percent, to $90.25 a barrel. These losses nearly offset gains recorded for Brent the previous day.

Market participants attributed the decline primarily to indications of progress in US-Iran negotiations aimed at ending the ongoing conflict and reopening the Strait of Hormuz, a strategic chokepoint for global oil shipments. “There has been palpable progress towards ending the crisis, and an increasing number of ships are transiting the critical chokepoint,” said PVM analyst Tamas Varga, explaining the renewed downward pressure on prices.

However, hopes for a lasting resolution were tempered by recent US military strikes near the Strait of Hormuz targeting Iranian missile sites and vessels allegedly attempting to lay mines. Commerzbank analysts noted that these actions have somewhat dampened expectations for a framework agreement between Washington and Tehran but added that market confidence remains strong despite the tensions.

Iran condemned the US strikes on Tuesday as violations of a ceasefire, while the United States maintained the operations were defensive measures. The same day, Israel intensified bombing campaigns in Lebanon, further complicating regional stability and peace efforts. The ongoing conflict, which followed a ceasefire agreement in April after three months of hostilities, has directly impacted negotiations over access to the Strait of Hormuz, through which a significant portion of the world’s oil and liquefied natural gas (LNG) passes.

News that several LNG tankers have recently navigated the strait without incident helped alleviate immediate supply disruption fears, contributing to the fall in crude prices. Analysts highlighted that the gradual resumption of shipping activity through this key corridor is boosting expectations of a forthcoming reopening, which would bolster global energy supplies.

Traders continue to monitor tanker movements and export flows from the Gulf, as any sustained reopening of the Strait of Hormuz would help stabilize markets. Meanwhile, investors remain attentive to upcoming policy signals from the US Federal Reserve and production decisions from major oil-exporting countries, both of which could influence future demand and supply dynamics.

Despite ongoing geopolitical tensions, some market watchers caution that slowing global economic growth and weakening fuel demand in major consuming countries may exert additional downward pressure on crude prices in the weeks ahead.