Oil prices plunge more than 7% to two-week lows
Oil prices dropped sharply on Wednesday, hitting two-week lows as investors reacted to reports that the United States is close to reaching a framework agreement with Iran to end the conflict.
Highlights
- Brent crude fell 6.02% to $103.26 a barrel.
- WTI dropped 6.67% to $95.45 a barrel.
- The decline ranks among the largest daily moves in recent weeks.
- The market reacted to prospects of de-escalation between the US and Iran.
Market reaction
Brent crude had fallen 7.12% to $102.05 a barrel. West Texas Intermediate (WTI) lost 7.84% and was trading at $93.90 a barrel.
Both benchmarks recorded some of their largest single-day declines since mid-April.
According to Reuters, Washington expects a response from Iran on key points of the agreement within the next 48 hours. While no final deal has been reached, the report suggests this is the closest the two sides have come to a ceasefire since the war began.
Reasons for the decline
Oil prices had risen steadily throughout 2026 due to severe disruptions in shipping through the Strait of Hormuz. The closure of this critical route significantly reduced global supply and pushed prices to their highest levels since 2022. News of a potential diplomatic breakthrough triggered a wave of profit-taking.
Additional pressure came from weekly inventory data released by the American Petroleum Institute (API), which showed U.S. crude stockpiles fell by 8.1 million barrels last week. Gasoline stocks dropped 6.1 million barrels, and distillate inventories declined by 4.6 million barrels.
Geopolitics remains key driver for oil markets
The sharp sell-off in oil prices underscores how sensitive the market remains to any signs of easing tensions in the Persian Gulf. Even the possibility of a framework agreement was enough to trigger a significant correction after months of gains.
As long as negotiations continue, oil prices are likely to stay highly volatile. Official U.S. Energy Information Administration (EIA) inventory data, due later in the day, should provide further insight into the fundamental supply-demand balance.
In an earlier report, we noted that the oil market weighs new attacks near the Strait of Hormuz.
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