Oil prices fell Tuesday as President Donald Trump sought to convince the market that a deal with Tehran was days away, despite the barrage of strikes between Israel and Iran this week.
U.S. crude oil futures were down 2.9% to $88.64 by 9:42 a.m. ET. Brent futures, the international benchmark, lost 2.5% to $91.86 per barrel.
Trump told reporters late Monday that a deal to end the war with Iran could come in “two or three days” and the Strait of Hormuz would open “immediately” after an agreement. He has repeatedly said a deal with Tehran to reopen Hormuz is close, but such an agreement still has not materialized.
The fragile ceasefire implemented in April nearly unraveled this week, after Iran launched missiles at Israel in retaliation for its strikes in Lebanon.
Israel hit back with strikes on the Islamic Republic. Trump pressured Israel Prime Minister Benjamin Netanyahu to refrain from further attacks.
The violence spiked oil prices briefly Monday, but the volley of strikes appears to have ended without further escalation for now. Iran and Israel said they have ceased fire.
Oil prices have surged about 30% since the U.S. and Israel attacked Iran on Feb. 28. Tehran retaliated by attacking tankers in the Strait of Hormuz and mining the sea lane. Traffic through Hormuz has plunged as a consequence, triggering the biggest oil supply disruption in history.
Trump has sought to pressure Iran into a deal by imposing a naval blockade on its ports and vessels.
Oil industry executives and analysts say crude prices have remained moderate in comparison to the scale of the disruption due to the buffer provided by global stockpiles. But prices will likely spike later this year as those inventories rapidly decline at the same time summer demand hits its peak, they say.
JPMorgan analysts say more oil may be going through Hormuz than is publicly visible. Some 2 million barrels per day might be getting out on tankers that have switched off their transponders, according to the bank’s estimates.
“Despite the ongoing naval blockade and the steep decline in commercial traffic, surprising volumes of crude and petroleum products still appear to be transiting the Strait,” JPMorgan analysts said in a June 4 note.
