Oil futures moved lower in Asian trading on Wednesday as signs that tensions in the Middle East may be easing tempered investor concerns about supply disruptions.
At 20:23 ET (00:23 GMT), Brent futures for July delivery were down 1.2% at $108.60 per barrel. West Texas Intermediate (WTI) crude for the same month slipped 1.4% to $100.88 per barrel. Both benchmarks had fallen about 4% in the previous session.
The near-term decline followed a U.S. announcement that an operation intended to restore commercial shipping through the Strait of Hormuz would be paused. U.S. President Donald Trump said on Tuesday that Washington would halt the initiative, raising hopes that talks with Iran might yield a diplomatic agreement. In a social media post, he wrote: "We have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalized and signed."
The pause came after a week of heightened tensions, when the rollout of the U.S. "Project Freedom" effort to secure maritime traffic through the strait prompted a military response from Tehran. The article reports that Tehran stepped up attacks on vessels and regional energy infrastructure earlier in the week, a development that had raised concerns about possible disruptions to oil supply.
Offsetting the price pressure from reduced geopolitical risk, market participants also noted evidence of tightening U.S. crude supply. Data from the American Petroleum Institute showed a drawdown of 8.1 million barrels in U.S. crude inventories for the latest week, a much larger decline than market expectations. Analysts in the article said the steep drop in stockpiles pointed to robust demand and constrained supply, factors that provided support to prices even as the geopolitical risk premium eased.
Overall, the market was balancing the potential for a diplomatic resolution that could lessen regional risk against clear signs of tighter U.S. supplies. Traders and analysts cited both dynamics as influential on the price action observed during the Asian trading session.
Summary: Oil prices fell in Asian trading after the U.S. paused a Strait of Hormuz operation, dampening immediate geopolitical risk, while U.S. crude inventories showed a considerably larger-than-expected weekly draw.