Oil prices swung sharply on Wednesday as traders weighed progress in US–Iran peace talks against fresh American military strikes, underscoring the fragile balance between diplomacy and conflict.
Brent crude fell more than 3% to around $95 a barrel, while West Texas Intermediate dropped 3.5% to $90.60.
Earlier in the day, both Brent and WTI prices had slipped as low as $91.78 per barrel and $87.80 a barrel, respectively.
Iranian state television claimed it had obtained a draft framework agreement between Tehran and Washington.
Reuters reported the document envisions a full return of Hormuz commercial shipping to pre‑conflict volumes within a month of signing.
Under the plan, vessel movements would be overseen by a joint Iranian‑Omani arrangement, while US naval forces would withdraw from Iranian waters and end their blockade.
Markets responded swiftly to the prospect of restored flows through the Strait of Hormuz, a chokepoint for nearly one‑fifth of global oil and gas trade.
Recent transits by LNG tankers have already given traders reason to anticipate a broader reopening.
The optimism was tempered by continued hostilities.
The US carried out strikes on Iranian missile sites and vessels it said were attempting to lay mines in the strait.
Iran denounced the action as a ceasefire violation, while Washington described it as defensive.
Israel also intensified bombing in Lebanon, further complicating the regional picture.
Hopes for a framework agreement between the US and Iran to end the conflict have been somewhat dampened by the recent US strikes on Iranian missile sites and vessels that were allegedly attempting to lay mines in the Strait of Hormuz. Nevertheless, confidence remains high among market participants.
Even if a deal is reached, restoring normal oil flows will not be immediate.
Abu Dhabi National Oil Co. chief Sultan Ahmed Al Jaber cautioned last week that the industry would need about four months to reach 80% of typical output, with full normalisation unlikely before 2027.
This lag reflects the complexity of clearing mines, repairing damaged infrastructure, and rebuilding supply chains.
Analysts further warn that while the draft framework is encouraging, logistical hurdles mean the market will remain tight for months.
The national average for US gasoline slipped three cents to $4.46 a gallon on Wednesday, according to AAA.
Diesel fell to $5.58 a gallon. Yet both remain nearly 50% higher than pre‑war levels, highlighting the persistent strain on consumers.
For global markets, the stakes are high. A sustained reopening of Hormuz would ease inflationary pressures worldwide, but the path depends on whether diplomacy can withstand military flare‑ups.
The swings in oil prices reflect the broader uncertainty surrounding the US–Iran conflict.
Traders are caught between signs of progress in negotiations and the reality of ongoing strikes.
The draft framework, if confirmed, could mark a turning point, but the timeline for recovery suggests volatility will persist.
With Brent crude back below $100 and WTI under $90, markets are pricing in cautious optimism.
Yet as Commerzbank observed, confidence remains high but fragile, hinging on whether Washington and Tehran can translate draft agreements into lasting peace.
