Global oil markets tumbled on Wednesday after the US delivered a sweeping 15-point proposal to Iran aimed at ending the Middle East war, sending benchmark crude prices tumbling more than 4% in early trading.
The sharp sell-off reflected a sudden — if still tentative — wave of optimism that a diplomatic off-ramp might soon reopen the choked Strait of Hormuz and ease the worst supply shock the energy world has seen in decades.
By 07:08 GMT, Brent crude futures — the global benchmark — had shed $4.17, or 4 percent, to trade at $100.32 a barrel after plunging as low as $97.57. U.S. West Texas Intermediate crude dropped $3.11, or 3.4 percent, to $89.24, having earlier hit a session low of $86.72. The reversals came after both contracts surged nearly 5 percent on Tuesday, only to give back some gains in volatile post-settlement trading.
The catalyst was unmistakable. President Donald Trump told reporters Tuesday that Washington was “making progress” in negotiations to end the war with Iran. A source familiar with the matter confirmed the U.S. had formally transmitted a 15-point settlement proposal to Tehran.
Israel’s Channel 2 reported that American diplomats are pushing for an initial one-month ceasefire to allow detailed talks on the plan’s core demands: the dismantling of Iran’s nuclear program, an end to Tehran’s support for regional proxy militias, and the full reopening of the Strait of Hormuz.
For a market already on edge after weeks of tit-for-tat strikes that have all but paralyzed tanker traffic through the narrow waterway—which normally carries roughly one-fifth of the world’s seaborne crude and liquefied natural gas—even the whisper of a truce was enough to trigger profit-taking.
“Expectations of a ceasefire have risen slightly, and profit-taking is leading the market,” said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment. “But the outlook remains uncertain as to whether negotiations will succeed, limiting selling.”
That caution is widely shared. Phillip Nova, senior market analyst, and Priyanka Sachdeva noted that Middle East developments would remain “the dominant price driver,” keeping oil locked in a wide trading range for the foreseeable future. Saul Kavonic, head of energy research at MST Marquee, put it more bluntly: “The market outlook remains tight notwithstanding the prospects of a war off-ramp.” Even if shipping resumes through the strait, he warned, it is far from clear that all shut-in production will come back online until there is greater confidence in the durability of any truce.
The war has delivered what the International Energy Agency has called the largest single oil-supply disruption on record. Tankers have largely abandoned the strait, forcing producers to scramble for alternatives.
Shipping data show Saudi Arabia has dramatically ramped up exports from its Red Sea port of Yanbu, pushing volumes to nearly 4 million barrels per day last week—a sharp increase from pre-war levels.
In a partial olive branch, Iran informed the United Nations Security Council and the International Maritime Organization on Tuesday that “non-hostile vessels” may once again transit the strait, provided they coordinate with Iranian authorities.
Yet violence on the ground continues unabated. U.S., Israeli, and Iranian strikes persisted into Wednesday, and sources said Washington is preparing to dispatch additional troops to the region.
On the demand side, U.S. inventory data offered a modest counterweight to the bullish supply narrative. According to market sources citing American Petroleum Institute figures released Tuesday, crude stocks rose 2.35 million barrels in the week ended March 20. Gasoline inventories climbed 528,000 barrels, and distillate stocks gained 1.39 million barrels.
Still, traders are under no illusions that a single diplomatic overture will instantly heal the deep fractures. Skepticism abounds that Iran will accept the plan’s most onerous terms—particularly on its nuclear program and proxy network—while Israeli and American strikes continue.
The market’s reaction on Wednesday was less a vote of confidence in an imminent peace than a classic case of “buy the rumor, sell the fact” after Tuesday’s sharp rally.
For now, the fragile prospect of talks has given oil bulls a moment of pause. But with fighting ongoing and the Strait of Hormuz still effectively a war zone, any relief in prices could prove short-lived.
WHAT YOU SHOULD KNOW
Oil prices plunged nearly 4% on Wednesday after the US delivered a 15-point proposal to Iran aimed at ending the Middle East war, including demands to dismantle its nuclear program, stop backing proxies, and reopen the Strait of Hormuz.
