Oil prices fell sharply on Tuesday, hitting two-week lows after reports that Washington is close to a preliminary framework agreement with Iran aimed at ending the ongoing conflict.
Brent crude futures dropped $6.70, or 6.1%, to $103.17 a barrel in early trading after briefly touching their weakest level in nearly two weeks. US West Texas Intermediate (WTI) crude fell $6.77, or 6.6%, to $95.50 a barrel. Both benchmarks were set for their steepest daily percentage and dollar declines since mid-April, extending losses of around 4% recorded in the previous session.
The sell-off followed an Axios report suggesting the United States expects Iranian responses on several outstanding issues within the next 48 hours. While no final agreement has been reached, the report indicated that negotiations are closer to a potential framework than at any point since the war began.
Iran has maintained that it will only accept what it describes as a fair and comprehensive settlement, while insisting its core positions remain unchanged.
The conflict has already had a significant impact on global energy flows, particularly after disruptions in shipping through the Strait of Hormuz. The waterway, a critical passage for global oil exports, has seen reduced traffic since hostilities escalated in February, contributing to tighter supply conditions and elevated prices in recent weeks.
US military operations have also continued in the region. On Monday, the Pentagon said it destroyed several Iranian small boats as part of efforts to secure safe passage for commercial vessels attempting to exit the Strait of Hormuz.
The strain on global supply chains has been reflected in inventory data. US crude stockpiles fell for a third consecutive week, while gasoline and distillate inventories also declined, according to market sources citing American Petroleum Institute figures.
Crude inventories reportedly dropped by 8.1 million barrels in the week ending May 1. Gasoline stocks decreased by 6.1 million barrels, while distillates fell by 4.6 million barrels over the same period.
Official figures from the US Energy Information Administration are expected later in the day and are likely to provide further insight into the scale of supply tightening.
Analysts say the recent price decline reflects easing fears of prolonged disruption if diplomatic progress continues, though uncertainty remains high given the volatility of the conflict and its impact on global energy markets.
