Brent Crude Retreats Below $98 as US-Iran Ceasefire Dynamics Shift

Oil Prices Ease After Previous Gains

Brent crude futures declined to below $98 per barrel on Wednesday, giving back some of the gains recorded in the prior trading session. The price movement followed political and diplomatic signals surrounding the ongoing US-Iran conflict and ceasefire arrangements.

President Donald Trump announced an extension of the US-Iran ceasefire, stating that Iran’s leadership was “seriously fractured.” He indicated that the truce would remain in place until Iranian leaders present a “unified proposal” to end the conflict, linking the duration of the ceasefire to Iran’s internal political cohesion and its negotiating position.

Diplomatic Setbacks and Supply Strain

Reports indicated that Vice President JD Vance canceled a planned trip to Islamabad, which had been scheduled for negotiations, after Tehran informed the United States via Pakistan that it would not participate in the meeting. This development signaled a setback in diplomatic engagement efforts involving Pakistan as an intermediary channel.

Iran also stated that it would not reopen the Strait of Hormuz while the US Navy continues intercepting vessels. The status of this key maritime chokepoint remains a central factor in oil market risk assessments, as it is critical for global crude flows.

The conflict continues to strain oil supply, with estimates of demand destruction already approaching 4 million barrels per day. Projections suggest this figure could rise to 5 million barrels per day, equivalent to around 5% of global supply. Asia is expected to bear the brunt of this impact, reflecting the region’s significant reliance on seaborne crude flows affected by the disruption.

FAQ

Why did Brent crude fall below $98 per barrel?
Brent crude fell below $98 per barrel after President Donald Trump extended the US-Iran ceasefire and linked its continuation to Iran presenting a unified proposal, amid ongoing geopolitical and supply uncertainties.

What conditions did President Trump set for maintaining the ceasefire with Iran?
President Trump stated that the ceasefire would remain in place until Iran’s leaders present a “unified proposal” to end the conflict and described Tehran’s leadership as “seriously fractured.”

Why was Vice President JD Vance’s trip to Islamabad canceled?
The trip was canceled after Tehran informed the United States via Pakistan that it would not take part in the planned negotiations in Islamabad.

How is the conflict affecting global oil supply and demand?
The conflict is straining supply, with demand destruction estimates nearing 4 million barrels per day and potentially rising to 5 million barrels per day, about 5% of global supply, with Asia expected to be most affected.