Crude oil prices plunged in midday trading on Wednesday after the White House dismissed an Iranian media report about an imminent deal to reopen the Strait of Hormuz as a "complete fabrication."
Front-month West Texas Intermediate crude futures slipped 4.37% to $89.79 per barrel, while Brent futures fell 4.15% to $95.45/bbl.
Saxo Bank strategists said that even if a deal is reached, market normalization is likely to take months, with ongoing demand for replacement barrels and depleted inventories potentially leading to a higher price floor.
President Trump said during his Cabinet meeting on Wednesday that no one nation would control the Strait of Hormuz, pushing back on Iranian demands to manage the vital energy waterway.
"Nobody's going to control it. It's international waters," Trump said. "The Strait's going to be open to everybody", and the US will "watch over it."
Though Iranian media said on Wednesday that it had obtained an unofficial draft of an interim pact to end the Middle East, the White House called the reported memorandum of understanding "a complete fabrication."
"This report from Iranian-controlled media is not true and the MOU they 'released' is a complete fabrication," the White House said in a social media post on X. "Nobody should believe what Iranian state media is putting out."
On Wednesday, Trump said there's still work to be done to reach a deal, but he spoke with a measure of certainty that the two sides would get there.
"They want very much to make a deal," Trump said. "So far, they haven't gotten there. We're not satisfied with it, but we will be, either that or we'll have to just finish the job."
Meanwhile, an Iranian official reportedly said that Iran and Oman are negotiating a new framework for maritime transit via the Hormuz, noting that previous arrangements will no longer govern passage through the strategic waterway.
Iran and Oman, as neighboring littoral states, are jointly negotiating a new mechanism for the passage of ships through the Strait of Hormuz, Ali Bagheri, deputy secretary of Iran's Supreme National Security Council, said.
Baqeri said Iran's enriched uranium stockpile is not part of the current peace talks, and the two sides have not yet reached an agreement on the reopening of the Strait. "Until we agree on all issues, we consider that we have not agreed on anything," Baqeri said.
For now, the strategic waterway remains effectively blocked, subject to the dual blockade by the US and Iran.
"Negotiations between the US and Iran remain the key variable, with access likely to stay selective until a clearer framework for navigation is agreed," Kpler strategists said on Wednesday.