Key Takeaways

• Crude extends losses: Brent oil futures fell 1.2% to $108.60 per barrel, while WTI dropped 1.4% to $100.88 — extending Tuesday’s 4% slide.
• Project Freedom paused: Trump announced the operation to restore Hormuz shipping will be temporarily halted as diplomatic talks progress.
• Blockade stays: Despite the pause, Trump confirmed the U.S. naval blockade remains “in full force and effect.”
• Diplomatic hopes rise: The pause aims to “see whether or not the Agreement can be finalized and signed,” per Trump’s social media post.
• Iran’s military response: Earlier this week, Tehran retaliated against Project Freedom by stepping up attacks on vessels and regional energy infrastructure.
• U.S. inventories shock: API data showed crude stockpiles plunged 8.1 million barrels — a much larger-than-expected draw.
• Supply tightness limits decline: The steep inventory drop underscored robust demand and constrained supply, cushioning prices even as geopolitical risk premiums eased.

Oil prices extended losses during Asian trading on Wednesday as signs of de-escalating geopolitical tensions in the Middle East outweighed lingering supply concerns, with investors also weighing a sharp draw in U.S. crude inventories.

As of 20:23 ET (00:23 GMT), Brent oil futures expiring in July fell 1.2% to $108.60 per barrel, while West Texas Intermediate (WTI) crude futures slipped 1.4% to $100.88 per barrel.

Both contracts settled 4% lower in the previous session.

Trump Pauses Project Freedom

U.S. President Donald Trump said on Tuesday that Washington would pause an operation aimed at restoring commercial shipping through the Strait of Hormuz — raising hopes for a diplomatic breakthrough with Iran.

“We have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalized and signed,” Trump wrote in a social media post.

The pause follows the heightened tensions seen earlier this week, when Trump’s “Project Freedom” initiative to secure maritime traffic through the strait triggered a military response from Iran.

Tehran stepped up attacks on vessels and regional energy infrastructure, intensifying concerns about supply disruptions.

U.S. Inventory Plunge Cushions Prices

Limiting the downside, however, were signs of tightening U.S. supply. Data from the American Petroleum Institute showed crude inventories fell by 8.1 million barrels in the latest week — a much larger-than-expected draw.

The steep drop in stockpiles underscored both robust demand and constrained supply, providing some support to prices even as geopolitical risk premiums eased.