BY COMFORT OGBONNA
Global oil prices fell sharply on Wednesday, dropping more than 3% as market volatility intensified amid ongoing tensions in the Middle East. The decline reversed earlier gains as investors reacted cautiously to mixed signals about the potential end of the conflict involving the United States, Israel, and Iran.
The front-month June contract for Brent crude fell by $3.33, or about 3.2%, to $100.64 per barrel by 0641 GMT. Meanwhile, U.S. benchmark West Texas Intermediate crude for May delivery declined $3.34, or 3.3%, to $98.04 per barrel.
Earlier in the day, oil prices had moved higher as traders reacted to geopolitical risks in the Middle East. However, the market quickly reversed course as uncertainty surrounding the war prompted investors to secure profits after the recent surge in energy prices.
Market analysts noted that the price drop reflected a pause in trading activity during Asian market hours combined with growing speculation that the conflict could soon wind down. Emril Jamil, a senior analyst at London Stock Exchange Group, said the decline likely reflects profit-taking as traders respond to signals from Washington suggesting that military operations may be nearing an end.
The June Brent contract had already fallen by more than $3 in Tuesday’s session following unconfirmed media reports indicating that Masoud Pezeshkian, the president of Iran, was open to ending the conflict.
U.S. President Donald Trump added to speculation about a potential resolution when he told reporters Tuesday that the United States could conclude its military campaign within two to three weeks. He also suggested that Iran would not necessarily need to sign a formal agreement for hostilities to stop, marking one of his clearest indications that Washington may be preparing to wind down the month-long conflict.
Despite these comments, analysts warn that the effects of the war could continue to influence global oil markets even if the fighting ends soon. Damage to energy infrastructure and disruptions to major shipping routes could keep supplies tight for some time.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, explained that the speed at which global supply chains return to normal will be a critical factor in determining oil price trends in the coming weeks.
She noted that even if tensions begin to ease, oil tanker operations may not immediately resume at full capacity. Higher shipping costs, insurance risks, and safety concerns could slow the movement of vessels across the region. In addition, the full extent of damage to energy infrastructure may take time to assess.
A key concern for global energy markets remains the status of the Strait of Hormuz, one of the world’s most important maritime routes for oil and gas shipments. Roughly 20% of global oil and liquefied natural gas trade passes through the narrow waterway, making it a critical artery for global energy supply.
Reports indicate that President Trump may seek to bring the war to an end before the strait fully reopens for commercial shipping. If true, that scenario could continue to restrict oil flows even after military operations stop.
Analysts at the London Stock Exchange Group said that despite ongoing diplomatic contacts and occasional comments from U.S. officials predicting a relatively quick end to the conflict, the situation remains highly uncertain. They warned that limited diplomatic progress, ongoing maritime attacks, and threats against energy infrastructure continue to keep supply risks elevated.
Recent production data also highlights the pressure on global oil supply. According to a survey of the Organization of the Petroleum Exporting Countries, oil output among member countries dropped by approximately 7.3 million barrels per day in March compared with the previous month. The sharp decline reflects forced export reductions linked to disruptions in the Strait of Hormuz.
At the same time, production in the United States has also experienced setbacks. Data from the U.S. Energy Information Administration showed that American crude oil output fell in January by the largest margin in two years. A severe winter storm disrupted production across several major oil-producing regions, temporarily knocking significant volumes offline.
Together, these developments illustrate how geopolitical tensions, infrastructure disruptions, and weather-related challenges are combining to create a highly volatile environment for global oil markets. While hopes for a diplomatic resolution have helped ease some concerns, analysts say the path to stability for energy prices may still take time as supply chains gradually recover and the full economic impact of the conflict becomes clearer.