Oil prices dipped during Asian trading on Wednesday after U.S. President Donald Trump outlined plans to pause a key military operation in the Strait of Hormuz, raising hopes for a diplomatic breakthrough with Iran that could ease regional tensions.
The announcement came as Trump revealed Washington would temporarily halt Project Freedom, the U.S.-led effort to escort commercial ships through the vital waterway, which carries roughly one-fifth of global oil and gas exports.
This decision follows a week of heightened conflict in the Middle East, where threats and attacks had driven crude prices up by more than 6 per cent before they began to retreat.
Brent crude, the international benchmark, settled 1.7 per cent lower at $108 per barrel. Meanwhile, U.S. West Texas Intermediate crude eased 1.6 per cent to $100.60. The pullback reflects cautious optimism among traders, even as prices remain elevated following a conditional U.S.-Iran ceasefire announced on 8 April and subsequently extended.
In a social media post on Tuesday, Trump stated that Project Freedom would be “paused for a short period of time to see whether or not the Agreement can be finalized and signed.” He emphasised that “Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran,” while noting the U.S. would continue blocking vessels bound for Iranian ports to sustain economic pressure on Tehran.
Investment strategist Charu Chanana at Saxo described the pause as a potential olive branch. “The key question for oil traders is whether this leads to real progress in reopening trade through the Strait of Hormuz,” she said. “For now, there is little evidence of that.”
U.S. Secretary of State Marco Rubio reinforced the diplomatic push, telling reporters the initial U.S.-Israeli offensive in Iran had concluded with objectives met. “We would prefer the path of peace. What the president would prefer is a deal,” Rubio added.
Iran has offered no immediate response to Rubio. Its parliamentary speaker, Mohammad Ghalibaf, recently remarked, “We know well that the continuation of the status quo is intolerable for America, while we are just getting started.”
The operation had strained the fragile truce, with the U.S. reporting strikes on Iranian fast boats in the strait and the United Arab Emirates accusing Tehran of targeting one of its oil ports, an allegation Iran rejects.