Following reports that Donald Trump is amenable to ending the military campaign against Iran, even if the strategically vital Strait of Hormuz remains partially closed, global oil prices fell in Asian trading on Tuesday, reversing earlier gains.
After rising by almost 2% earlier in the session, Brent crude futures for May dropped by $1.22, or 1.08%, to $111.56 per barrel. The June contract, which was traded more frequently, was valued at $105.76. West Texas Intermediate (WTI) crude in the United States also fell 98 cents, or 0.95%, to $101.90 per barrel, pulling back from previous highs not seen since early March.
The decline in oil prices, according to market analysts, is a reflection of short-term optimism about a potential de-escalation of the conflict. However, they warned that unless regular oil flows through the Strait of Hormuz are completely restored, a long-term price correction is unlikely. Nearly one-fifth of the world’s oil supply and large amounts of liquefied natural gas are transported via the waterway, which is an essential global energy corridor.
According to the report, which cited administration officials, Trump is prepared to stop military actions against Iran in the absence of prompt assurances that the Strait will reopen. His previous warning that the United States might target Iran’s energy infrastructure if the route is blocked stands in contrast to this position.
Despite the recent decline, March saw one of the biggest monthly increases in recent memory for oil prices, with Brent and WTI rising by almost 59% and 58%, respectively.