Oil Falls as Trump Backs Safe Passage Through Hormuz, Signals Progress in Iran Talks

Oil fell after President Donald Trump said the US would support safe passage for ships through the Strait of Hormuz and pointed to progress in negotiations with Iran.

Brent crude dropped below $108 a barrel on May 3, extending declines to a third straight session, Bloomberg reported. West Texas Intermediate traded near $101 a barrel.

Trump wrote on Truth Social that ships from countries not involved in the Middle East conflict were stranded in the Strait of Hormuz and that the US would support their safe transit. He said the measure is scheduled to begin on May 4, based on Middle East time.

He also said talks between the US and Iran were moving in a positive direction, fueling hopes for an easing in geopolitical tensions. Iran is also reviewing the US proposal, according to reports.

Oil prices had surged this year as concerns mounted that the Strait of Hormuz could be closed amid escalating tensions between the US and Iran. Fears of supply disruptions also grew under what the article described as a dual blockade by the two countries, pushing Brent to its highest level since 2022 last week.

Still, some in the market view the latest decline as a short-term response to hopes for de-escalation. "The market is responding to signs of easing tensions by giving back part of the geopolitical premium," Haris Khurshid, chief investment officer at Karobaar Capital, said. "The underlying tensions have not been resolved."

Trump also suggested the US could respond forcefully if ship movements are disrupted. "If humanitarian procedures are obstructed, we will have no choice but to respond strongly," he said.