Oil prices decline as Trump signals talks with Iran

Oil market reaction to U.S.–Iran developments

International benchmark Brent crude futures fell 4.52% to $98.71 per barrel, while U.S. West Texas Intermediate futures declined 3.72% to $88.89 per barrel on Wednesday. The price moves followed comments from President Trump indicating a shift away from earlier threats to strike Iranian energy infrastructure.

Speaking from the Oval Office, Trump said he had pulled back from his prior threat “based on the fact we’re negotiating.” He added that Iranian counterparts were “talking to us, and they’re talking sense,” though Iran has publicly denied engaging in direct talks with the United States.

Later on Tuesday, The New York Times, citing two unnamed officials, reported that the U.S. had sent Iran a 15-point proposal intended to help end the war. The proposal was reportedly delivered through Pakistan. According to the report, it is unclear how widely the plan has been circulated within the Iranian leadership and whether Israel, which is carrying out attacks on Iran alongside the U.S., would support it.

Persistent supply risks and market volatility

Despite the price decline, indications from Iranian military leadership suggest continued uncertainty for oil markets. A spokesperson for Iran’s top joint military command warned that prices would not normalize until regional stability is secured under its military control, signaling expectations of ongoing volatility.

Goldman Sachs co-head of global commodities research Daan Struyven described the current disruption to oil supplies as the largest shock in decades when measured as a share of global supply. The bank observed that near-term crude price movements are being driven less by changes in the base case outlook and more by shifts in the perceived probability of worst-case scenarios.

According to Goldman Sachs, crude is effectively trading on a geopolitical risk premium, as investors hedge against the possibility of prolonged supply disruptions and critically low inventories. The bank’s base case assumes that oil flows through the Strait of Hormuz will normalize in April over a four-week period.

FAQ

Why did oil prices fall on Wednesday?
Oil prices fell after President Trump indicated that the U.S. and Iran are “in negotiations right now” and suggested Iran wants a peace agreement, prompting markets to reassess geopolitical risk and the likelihood of imminent military escalation.

How much did Brent and WTI crude decline?
Brent crude futures fell 4.52% to $98.71 per barrel, while U.S. West Texas Intermediate futures declined 3.72% to $88.89 per barrel.

What is Goldman Sachs’ view on the current oil disruption?
Goldman Sachs characterizes the current disruption as the largest oil supply shock in decades relative to global supply and notes that prices are being driven by a geopolitical risk premium, with investors focused on worst-case scenarios rather than changes in the base case outlook.

What does Goldman Sachs assume about flows through the Strait of Hormuz?
The bank’s base case assumes that oil flows through the Strait of Hormuz will normalize in April over a four-week period.