Oil prices accelerated their decline on Tuesday as Trump attempted to reassure the market that a deal with Tehran would be reached in a matter of days, despite the Israeli-Iranian strikes this week.
WTI futures fell 3.67%, trading below $88 per barrel, while Brent contracts lost 3.23%, reaching $91 in recent trading.
Late Monday, Trump told reporters that a deal to end the war with Iran could be reached in "two to three days," and that the Strait of Hormuz would open "immediately" following an agreement. He has repeatedly said that a deal with Tehran to open the Strait of Hormuz is near, but such an agreement has yet to materialize. A fragile ceasefire, established in April, nearly collapsed this week after Iran fired missiles at Israel in response to its strikes on Lebanon. Israel retaliated against the Islamic Republic. Trump pressured Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
The exchange of strikes briefly boosted oil prices on Monday, but at least for now there has been no further escalation. Iran and Israel announced a ceasefire.
Oil industry executives and analysts say oil prices have remained moderate compared to the scale of the disruption thanks to the buffer provided by global inventories. But prices are likely to rise sharply later this year as those inventories rapidly dwindle, just as summer demand peaks.
JPMorgan analysts believe more oil may be passing through Hormuz than is publicly visible. The bank estimates that approximately 2 million barrels per day could be transported on tankers that have turned off their transponders.
"Despite the ongoing naval blockade and the sharp decline in commercial traffic, significant volumes of oil and petroleum products appear to be continuing to pass through the strait," JPMorgan analysts noted last week.