Oil prices fall after Trump’s remarks despite analyst warnings of a supply crisis

Oil prices fell by nearly 3% on Wednesday after US President Donald Trump once again stated that the war with Iran would end “very quickly,” although investors remained cautious about the outcome of peace talks as supply disruptions from the Middle East continued.

Brent crude futures fell by $2.97, or 2.7%, to $108.31 per barrel by 10:59 GMT, while US West Texas Intermediate crude dropped by $2.69, or 2.6%, to $101.46 per barrel.

Both benchmarks are heading for their largest daily losses in both percentage and dollar terms in two weeks.

“Prices are likely to retain some upside potential even if an agreement is reached, because supplies will not immediately return to pre-war levels,” said Emril Jamil, research analyst at LSEG.

Both crude benchmarks had already declined by around $1 on Tuesday after US Vice President JD Vance said the United States and Iran had made progress in negotiations. However, Trump also stated that the United States may still need to launch another strike on Iran and that he had been only an hour away from ordering an attack before postponing it.

Citigroup analysts said on Tuesday they expect Brent crude to rise toward $120 per barrel in the near term, arguing that oil markets are still underpricing the risk of prolonged supply disruptions.

Wood Mackenzie also estimated that prices could approach $200 per barrel if the Strait of Hormuz remains largely closed through the end of the year.

Meanwhile, analysts at PVM warned that global oil inventories could fall to critically low levels.

“However, as has recently been observed, market participants still appear somewhat complacent or overly confident regarding the potential consequences of this conflict,” the firm added.

The price spread between Brent crude contracts for next-month delivery and contracts expiring six months later — a key indicator of how traders assess current supply tightness — currently stands near $20 per barrel, well below the levels above $35 seen last month.

Two supertankers exited the Strait of Hormuz on Wednesday, while another tanker continued its journey out after waiting more than two months carrying 6 million barrels of Middle Eastern crude oil.

Even so, the number of ships passing through the strait remains far below the pre-war average of 130 vessels per day.

To offset supply shortages, countries are increasingly relying on commercial and strategic inventories.

In the United States, data from the American Petroleum Institute — according to market sources — showed crude inventories declined for a fifth consecutive week last week, while fuel inventories also fell.

Official data from the US Energy Information Administration is expected later الأربعاء, with a Reuters survey forecasting a decline of around 3.4 million barrels in crude inventories.

In another sign of worsening supply pressures, Britain eased some sanctions to allow imports of diesel and jet fuel refined in third countries using Russian crude oil.