Oil declines as Trump suspends planned attack on Iran

Oil prices declined on Tuesday, with global benchmark Brent crude falling by 1.5% after US President Donald Trump announced the suspension of a planned attack on Iran to allow room for negotiations aimed at ending the war in the Middle East.

Trump posted on social media on Monday that he had decided to delay a military strike on Iran that had been scheduled for Tuesday, while efforts to reach an agreement continue, adding that the United States remains ready to resume attacks if no deal is reached.

Brent crude futures for July delivery fell by $1.73, or 1.5%, to $110.37 per barrel by 08:25 GMT, while US West Texas Intermediate crude for June delivery — which expires on Tuesday — dropped by 63 cents, or 0.60%, to $108.03 per barrel. The more active July contract also declined by 82 cents, or 0.8%, to $103.56 per barrel.

Ole Hansen of Saxo Bank said:

“We continue to move from one news cycle to another, with a lot of noise, but so far there are no real developments pointing to the beginning of the end of the war.”

He added that Trump’s remarks were the primary reason behind the decline in oil prices.

Brent and WTI had reached their highest levels since May 5 and April 30 respectively during the previous session.

The Strait of Hormuz Continues to Pressure Markets

The conflict in the Middle East has effectively shut down the Strait of Hormuz, a critical waterway through which around one-fifth of global oil and liquefied natural gas supplies normally pass, causing the largest disruption to oil supplies in the world, according to the International Energy Agency.

Iranian state media reported on Tuesday that Tehran’s latest peace proposal to the United States includes ending hostilities on all fronts, including Lebanon, the withdrawal of US forces from areas near Iran, and compensation for war-related destruction.

In a separate development, US Treasury Secretary Scott Bessent extended a sanctions waiver for 30 days to allow “energy-vulnerable” countries to continue purchasing seaborne Russian oil.

US Inventories Decline

In the United States, Energy Department data showed a draw of 9.9 million barrels from the Strategic Petroleum Reserve last week, a record level, reducing inventories to around 374 million barrels, the lowest level since July 2024.

US crude oil inventories are expected to decline by around 3.4 million barrels in the week ending May 15, according to data from the US Energy Information Administration scheduled for release on Wednesday.