Oil prices fell sharply on Wednesday after reports emerged that the United States had sent Iran a 15-point proposal aimed at ending the ongoing war, raising hopes that a ceasefire could be within reach.
Brent crude dropped by nearly 6% to just below $99 per barrel, while U.S. West Texas Intermediate also fell by more than 5%, settling around $87. The decline came despite continued airstrikes between Israel and Iran, showing how strongly markets are reacting to any sign of possible diplomacy.
The proposed plan from United States is still awaiting a response from Iran, but analysts say it suggests efforts are underway to find a quicker resolution to the conflict.
Even so, uncertainty remains high. Iran has denied holding direct talks with Washington, with one of its military spokesmen saying the U.S. is essentially “negotiating with itself.”
The conflict has severely disrupted global oil supply, especially through the Strait of Hormuz, a critical route that normally carries about a fifth of the world’s oil and gas. Shipments through the strait have been largely halted, leading to a massive shortfall in supply.
To ease the pressure, Saudi Arabia has increased oil exports from its Red Sea port in Yanbu, helping to offset some of the disruption.
Meanwhile, risks to the global market are growing from multiple fronts. In Russia, oil exports from key Baltic ports were suspended after Ukrainian drone attacks caused a major fire, adding further strain to supply.
Analysts warn that even if a ceasefire is reached, it may take time for oil production and shipments to fully return to normal. Until then, prices are expected to remain volatile, driven largely by geopolitical developments.
There are also concerns about the long-term impact. Larry Fink warned that if oil prices climb as high as $150 per barrel, the global economy could slide into a recession.
For now, the oil market remains on edge caught between ongoing conflict and cautious optimism that diplomacy might eventually bring some relief.
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