Oil prices extended declines on Wednesday after a reported U.S.-Iran ceasefire deal raised prospects of reduced regional tensions, though analysts cautioned that structural risks to supply remain intact.
Brent crude futures fell 1.6% to $87.22 a barrel by 09:43 ET, while U.S. West Texas Intermediate crude dropped 1.3% to $81.31 a barrel. The declines followed a 5% slump in the prior session, when reports of a potential ceasefire triggered a sharp market reaction.
Preliminary data from Kpler cited by CNBC showed just five commodity ships transiting the Strait of Hormuz on Tuesday, well below the 10-day moving average of 15 vessels. The strait, which previously carried roughly one-fifth of global oil and liquefied natural gas flows before the late-February conflict began, remains a critical chokepoint for energy markets.
Analysts at Vital Knowledge noted that even with a ceasefire, the persistent risk of renewed hostilities continues to embed a geopolitical premium in oil prices. "A geopolitical risk factor will be permanently embedded in the price," the firm stated, adding that prices are unlikely to revert to pre-conflict levels.
ING analysts echoed this caution, emphasizing that an agreement between Iran and Oman does not equate to normalized oil flows. "This does not mean we will see normalization in oil flows through the key chokepoint," they said, adding that full reopening would require the U.S. to lift its blockade on Iranian ports and ease sanctions—a step not guaranteed by the reported framework.
A senior Iranian official, speaking to Al Jazeera, confirmed that Iran and Oman had agreed on a temporary alternative route through the strait following talks in Tehran. However, the official stressed that the strait would not fully reopen until the U.S. fulfills commitments made under a June framework deal. The reported ceasefire arrangement is expected to be formally announced in the coming days, though its durability remains uncertain amid the region's volatile security landscape.
The developments follow Tuesday's sharp price drop, which coincided with reduced shipping activity and heightened speculation over the ceasefire's implications for regional energy flows.
