Oil prices slip as Trump signals quick end to Iran conflict but supply fears persist

Oil prices edged lower on Wednesday after Donald Trump said the war involving Iran could end “very quickly,” easing some immediate concerns in energy markets even as traders remained cautious about continuing supply disruptions across the Middle East.

Brent crude futures fell 88 cents, or 0.8 percent, to $110.40 a barrel by early morning trading in Saudi Arabia, while US West Texas Intermediate crude dropped 67 cents, or 0.6 percent, to $103.48.

The decline followed comments from Trump and US Vice President JD Vance suggesting progress had been made in negotiations between Washington and Tehran. Vance said both sides appeared unwilling to return to full-scale military action, helping calm markets after weeks of volatility linked to the conflict.

Analysts said traders are attempting to assess whether diplomatic talks will lead to a lasting settlement or merely delay further escalation.

“Benchmark prices softened on a potential deal as the market gauges the geopolitical outcomes,” said Emril Jamil, senior oil research analyst at LSEG. He added that prices could still remain elevated because oil supply is unlikely to recover immediately even if an agreement is reached.

The conflict has severely disrupted shipping through the Strait of Hormuz, one of the world’s most important energy transit routes. The waterway normally carries around one-fifth of global oil supplies, but tanker movements remain well below normal levels.

Some vessels have resumed limited transit through the strait in recent days. Two Chinese supertankers carrying around four million barrels of Middle Eastern crude exited the route on Wednesday after remaining stranded in the Gulf for more than two months.

Despite signs of diplomatic progress, uncertainty remains high after Trump issued mixed signals over possible future military action. While telling lawmakers the conflict could end soon, he also warned earlier this week that the United States may strike Iran again if negotiations fail.

Trump said he had been close to authorising renewed military action before postponing it following a fresh proposal from Tehran aimed at ending the US-Israeli war. He also claimed Iranian leaders were “begging for a deal” and warned that new strikes could come within days if talks collapse.

Energy analysts said the market remains vulnerable to sudden price swings.

Toshitaka Tazawa, an analyst at Fujitomi Securities, said investors are closely watching whether Washington and Tehran can reach common ground. He noted that fears of renewed attacks and prolonged supply shortages are likely to keep prices high in the near term.

Financial firm Citigroup said it expects Brent crude to climb as high as $120 per barrel in the short term, arguing that markets may be underestimating the risk of a prolonged disruption to global supplies.

Meanwhile, countries have increasingly relied on strategic and commercial oil reserves to offset shortages. In the United States, crude inventories reportedly declined for a fifth consecutive week, according to market sources citing data from the American Petroleum Institute. Official inventory figures from the Energy Information Administration are expected later Wednesday.