Oil prices fell on Tuesday, with global benchmark Brent crude dropping 1.5 per cent, after U.S. President Donald Trump said he had paused a planned attack on Iran to allow for negotiations to end the war in the Middle East. Trump posted on social media on Monday that he was holding off a military attack on Iran scheduled for Tuesday while efforts to reach a deal continued, adding that the United States was ready to resume attacking if a deal is not reached.
Brent futures for July were down $1.73, or 1.5 per cent, at $110.37 a barrel, while U.S. West Texas Intermediate crude for June delivery, which expires on Tuesday, slipped 63 cents, or 0.60 per cent, to $108.03. The more active July contract fell 82 cents, or 0.8 per cent, to $103.56.
"We continue to jump from one news cycle to the next, with plenty of noise being created but, so far, no meaningful developments pointing toward the beginning of the end of the war," said Ole Hansen of Saxo Bank, who added that Trump's comments had driven oil lower.
In the previous session, Brent and WTI hit their highest levels since May 5 and April 30, respectively.
The Middle East conflict has effectively closed the Strait of Hormuz, a critical waterway that typically carries about a fifth of the global supplies of oil and liquefied natural gas, creating the world's biggest oil supply disruption, according to the International Energy Agency.
Tehran's latest peace proposal to the U.S. involves ending hostilities on all fronts including Lebanon, the exit of U.S. forces from areas close to Iran, and reparations for destruction caused by the war, state media reported on Tuesday.
Separately, U.S. Treasury Secretary Scott Bessent extended a sanctions waiver by 30 days to allow "energy-vulnerable" countries to continue purchasing Russian seaborne oil.
In the U.S., a record 9.9 million barrels were drawn from the Strategic Petroleum Reserve last week, Energy Department data showed, bringing stockpiles down to about 374 million barrels, the lowest point since July 2024.
U.S. crude inventories are expected to fall about 3.4 million barrels in the week to May 15 in weekly data from the Energy Information Administration due out on Wednesday.
