FINWIRES · TerminalLIVE
FINWIRES

US Oil Update: Futures Slide as Markets Price in Months-Long Normalization Process

By

Crude prices slipped in after-hours trade on Wednesday as investors weighed the prospect of a prolonged recovery in energy trade flows against growing optimism that the US and Iran could reach a peace deal, even as President Trump said he was not satisfied with the negotiations.

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.

On Wednesday, Trump said the US and Iran still have issues to resolve in peace talks, after Washington dismissed an Iranian media report of a framework deal to restore shipping via the Strait of Hormuz and to lift a US naval blockade on Iranian ports.

"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."

The US President told a Cabinet meeting on Wednesday that Iran remained keen to end the war, but that the US is "not satisfied."

"We're not satisfied with it, but we will be - either that or we'll have to just finish the job," Trump said.

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.

Trump said no country would be allowed to control the Strait, adding that the strategic waterway would remain open to all nations and that the US would "watch over it."

Iran and Oman are both neighboring littoral states and 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, reportedly said.

Bagheri 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.

For now, the strategic waterway remains effectively blocked, subject to the dual blockade by the US and Iran.

The International Energy Agency said in its May Oil Market Report that with Hormuz tanker traffic still restricted, cumulative supply losses from Arabian Gulf producers already exceed 1 billion barrels, with over 14 million barrels per day of oil now shut in.

Related Articles

Oil & Energy

Hormuz Tanker Traffic Slows as Supertanker Activity Wanes, Bloomberg Analysis Says

Commercial vessel traffic through the Strait of Hormuz slowed to a near-trickle on Wednesday, with a handful of mostly Iran-linked vessels transiting the strategic waterway, according to a Bloomberg analysis.Ship-tracking data showed that only two vessels were transiting into the Persian Gulf, while a Chinese fuel tanker appeared to pause mid-voyage on its exit route. The latest slowdown followed a brief uptick on Tuesday, when two large crude carriers exited the Strait.The fluctuations come as markets monitor US-Iran peace talks aimed at stabilizing maritime traffic and ending the conflict in the Middle East.President Trump described ongoing talks to extend a ceasefire as "proceeding nicely." However, securing reliable transit remains challenging, with Israel's escalating military campaign in Lebanon threatening to disrupt fragile diplomatic efforts.Tracking data showed an Iran-linked container vessel and a Chinese bulk carrier followed two supertankers out of the Strait on Tuesday. Outbound traffic had stalled by Wednesday, with the Hua Lin Wan halting after clearing waters near Iran's Larak Island.US military officials said on Wednesday that 109 commercial vessels have been forced to reroute since mid-April due to disruptions in the wider Gulf region.Inbound traffic included a Greek oil products tanker, a China-linked LPG carrier and several Iran-linked fuel vessels earlier in the week. On Wednesday morning, only two inbound container ships were observed, one of them linked to Iran.Widespread GPS and Automatic Identification System signal interference continues to obscure real-time tracking in and around the Strait, complicating efforts to independently verify vessel movements. Transit figures could be revised upward as vessels reappear after passing through high-risk zones.

Oil & Energy

Trump Says Strait of Hormuz Must Remain Open, Signals Military Action if Iran Talks Collapse

US President Donald Trump said the Strait of Hormuz must be opened for everyone, and that Iran or any other country cannot be allowed full control over the Strait, warning of further military action if negotiations fail.Trump made the remarks at a Cabinet meeting with US officials held on Wednesday."The Strait is going to be open to everybody. It's international orders, nobody's going to control it," Trump said when asked whether he would accept a short-term arrangement allowing Iran and Oman to control the passage.He added that the US will continue watching over it. "We're going to watch over it, we'll watch over it, but nobody's going to control it. That's part of the negotiation that we have. They would like to control it," he said.Trump also issued a direct warning over any attempt to restrict access through the strait, adding, "... Oman will behave just like everybody else, and we'll have to blow them up."US-Iran peace negotiations are currently still ongoing and remain unresolved.However, Trump said Iran is still very keen on coming to a peace deal. "Iran is very much intent; they want very much to make a deal. So far, they haven't gotten there, not, we're not satisfied with it, but that we will be," Trump said.He said that it will be "either that or we'll have to just finish the job."Secretary of State Marco Rubio echoed the administration's position, saying diplomacy remained the preferred option but reiterated that Iran would not be allowed to obtain a nuclear weapon."I think there's been some progress and some interest, and we'll see over the next few hours and days whether progress could be made," Rubio said.Defense Secretary Pete Hegseth said the US remained prepared to take military action if negotiations failed."So, whether it is through the efforts of your [US] negotiators that they ensure that they [Iran] never have a nuclear weapon, or we have to go back to the War Department to finish the job that way, we're prepared to do that...," Hegseth said.He added that the administration was targeting Iranian oil shipments globally, with many being seized.Trump also rejected the possibility of sanctions relief for Tehran."No, we're not talking about any easing of sanctions or giving money. No sanctions, no money, no nothing," he said when asked whether the US would allow Iran to return oil to global markets."We have control of the money that they claim is theirs. We'll keep control of that money when they behave properly and when they do what's right, we'll let them have their money, but right now we're not doing that," Trump added.The president said energy markets would stabilize despite tensions in the Gulf and predicted gasoline prices would decline "by a lot.""It'll come, it'll come down to where it was before we had it," Trump said of fuel prices.He also said the US and its allies were managing shipping traffic through the Strait of Hormuz, describing that there were many vessels in the Strait "wanting to get out.""At the right time, we'll release them," he said.Trump further linked any future agreement with Iran to a broader regional diplomatic push involving Arab states and the Abraham Accords."... we'd like to have them join the Abraham Accords. It'll be historic if they do it," he said, referring to Saudi Arabia, Qatar, UAE and other Gulf countries."I'm not sure we should make the deal if they don't sign," Trump added.

Oil & Energy

Oil Markets Price In Iran's Growing Leverage Over Strait of Hormuz, Kpler Says

Oil markets are increasingly being shaped less by Iran's nuclear program and more by its ability to control the Strait of Hormuz, underscoring how geopolitical leverage in the key chokepoint is becoming central to peace talks with the US, Kpler strategists said in a note Wednesday.Kpler data on tanker movements through the Strait show that even the risk of disruption, rather than confirmed physical blockages, is sufficient to alter freight pricing, insurance premia, and near-term crude sentiment.Michelle Brouhard, head of Policy and Geopolitical Risk at Kpler, said market participants see this as reinforcing a persistent "geopolitical risk floor" under oil prices, even in periods of otherwise balanced supply and demand fundamentals.The shift comes as US and Iranian officials continue to trade competing narratives over the contours of a possible agreement, with Washington signaling that any deal would include reopening the Strait of Hormuz, while Tehran insists that its strategic leverage in the Strait remains a non-negotiable asset.Kpler said the result is a widening gap between nuclear diplomacy and energy-market reality, according to traders and analysts.The Hormuz transit accounts for about a fifth of global seaborne crude oil, making it one of the key chokepoints in global energy flows.Kpler vessel-tracking data have shown that rerouting capacity is limited in the short term, meaning any credible threat to passage tends to swiftly translate into higher volatility across Brent-linked benchmarks and refined product spreads.US officials have publicly argued that a prospective agreement should address both uranium enrichment limits and the stability of the strategic waterway.Senator Ted Cruz said a settlement that leaves Iran with enrichment capacity and strategic control over the waterway would be a "disastrous mistake," while Senator Lindsey Graham warned that acceptance of Iranian leverage over energy routes would effectively position Tehran as a "dominant force requiring a diplomatic solution."Israel has also raised concerns that an agreement focused on the stability of the shipping lanes without dismantling Iran's enrichment capability would merely delay future confrontation, raising the risk of further regional escalation if talks underdeliver.For now, Kpler said markets remain tightly focused on the trajectory of talks and whether energy security or nuclear containment becomes the defining objective of any eventual deal.