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US Oil Update: Futures Plunge 4% as Trump Says Iran Talks in 'Final Stages'

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Crude oil prices tumbled in after-hours trading on Wednesday after President Trump said that the US and Iran are in the "final stages" of negotiations to end the Middle East conflict, which is now in its twelfth week.

Front-month West Texas Intermediate crude futures plunged by 4.87% to $99.08 per barrel, while Brent futures plummeted by 5.39% to $105.28/bbl.

US crude oil inventories decreased by 7.9 million barrels to 445 mmbbls in the week ended May 15, the Energy Information Administration said in its weekly report on Wednesday.

Crude oil input to refineries decreased by 80,000 barrels per day from the previous week to average about 16.3 mmb/d in the week ending May 15, while crude oil production dropped by 8,000 b/d to 13.7 mmb/d.

Saxo Bank strategists said that Trump warned that US strikes on Iran could resume within days if peace talks fail, adding to market volatility.

Trump on Wednesday said that negotiations with Iran were in the final stages, while warning of further attacks unless Iran agrees to a deal.

Though a fragile ceasefire was reached in April, talks to end the conflict have shown little progress so far. Earlier this week, Trump said he came close to ordering more attacks but held off to allow more time for negotiations.

On Wednesday, the US President said "we'll see what happens" with Iran, adding that a deal will be made or "we're going to do some things that are a little bit nasty, but hopefully that won't happen."

Iran's Revolutionary Guard threatened to extend the Middle East conflict "beyond the region" if the US and Israel resume attacks against Tehran.

"If aggression against Iran is repeated, the regional war that had been promised will this time be drawn beyond the region, and our crushing blows will lay you in black dust in places you cannot imagine," the IRGC said on Wednesday.

Iranian foreign ministry spokesperson Esmaeil Baghaei said Iran was ready to develop protocols for safe shipping traffic in cooperation with other coastal states, without providing further details.

The ongoing Middle East conflict has effectively closed the Strait of Hormuz, a critical waterway that handles about 20% of global oil and liquefied natural gas supplies, creating the world's largest oil supply disruption, according to the International Energy Agency.

The US Navy boarded the Iranian-flagged commercial oil tanker M/T Celestial Sea in the Gulf of Oman on Wednesday after suspecting it had violated a US blockade, US Central Command said in a statement.

The military has redirected 90 Iran-linked commercial vessels and disabled four others since imposing the blockade on April 13.

Kpler said the US blockade of Iranian ports is emerging as a central pressure point in the Trump administration's Iran strategy, with no Iranian crude tanker crossing the designated blockade line since April 13.

Crude loadings have fallen to about 640,000 barrels per day from about 2.1 million b/d previously, the data showed.

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