Oil prices fell Wednesday after Secretary of State Marco Rubio said the U.S. will give talks with Iran “every chance to succeed.”
West Texas Intermediate futures tumbled more than 5% to close at $88.68 per barrel. International benchmark Brent oil also lost more than 5% to settle at $94.29 per barrel.
Speaking at a White House Cabinet meeting, Rubio said talks with Iran have made some progress. President Donald Trump prefers diplomacy but has other options available if that doesn’t work, Rubio said, likely a reference to renewed military strikes.
“The bottom line is that we prefer the negotiated diplomatic route and we’re going to give it every chance to succeed,” the Secretary of State said.
Trump said he will not allow Iran to control the Strait of Hormuz as part of a deal. About 20% of the world’s oil supplies passed through Hormuz before the war.
“The strait is going to be open to everybody. It’s international waters, nobody’s going to control it,” the president said at his Cabinet meeting.
Earlier, Iranian state television said Tehran had committed to restore commercial traffic through Hormuz to prewar levels within one month of an agreement with the U.S., according to Reuters.
The report, which envisioned Iran managing ship traffic through the strait with cooperation from Oman, comes as negotiations are ongoing.
But the White House said in a social media post that the report about a memorandum of understanding was “a complete fabrication.”
Iran and the U.S. teetered this week between a deal and a renewed round of military escalation. U.S. forces launched strikes in southern Iran in a move the Pentagon described as defensive. Tehran vowed to retaliate for the attacks.
Industry veterans are skeptical oil flows will quickly return to prewar levels.
It will take at least four months to ramp oil flows to 80% of normal levels even if the U.S.-Iran conflict ends immediately, said Sultan Ahmed al-Jaber, head of Abu Dhabi National Oil Co., last week. It will take until the first or second quarter of 2027 for flows to fully normalize, he said.
