Market News

Oil prices were sharply lower on Wednesday, extending losses after Axios reported that the U.S. and Iran were closing in on an agreement to bring an end to the conflict.

International benchmark Brent crude futures slipped 8.2% to $100.83 per barrel as of 6:43 a.m. ET, while U.S. West Texas Intermediate futures lost 9.8% to $92.28. Both oil contracts settled more than 3.9% lower in the previous session.

Axios reported, citing two U.S. officials and two other sources briefed on the issue, that the White House believes it is nearing a one-page, 14-point memorandum of understanding to end the war and establish a framework for more detailed nuclear talks.

The U.S. reportedly expects Iran to respond on several key points over the next 48 hours. Nothing has been agreed yet between the two sides, but the sources told Axios that this was the closest Washington and Tehran had been to an agreement since the war began on Feb. 28.

A spokesperson for Iran’s foreign ministry told CNBC they were “evaluating” Washington’s 14-point peace proposal. The White House, meanwhile, was not immediately available to comment.

Iran said earlier on Wednesday that it would only accept a peace deal that was “fair.”

U.S. President Donald Trump on Tuesday announced in a Truth Social post that the U.S. would temporarily halt “Project Freedom,” a military effort launched just a day earlier to escort commercial vessels through the Strait of Hormuz, citing progress in negotiations with Iran toward a final agreement. 

The Trump administration said roughly 23,000 seafarers across vessels from 87 countries have been stranded in the Persian Gulf following Iran’s effective shutdown of the strait.

“A deal that normalises oil flows through the Strait of Hormuz is crucial,” Warren Patterson, head of commodities strategy at Dutch bank ING, said in a research note. “Roughly 13 mb/d of disrupted supply is being largely offset by inventory, which is clearly declining rapidly. This leaves the market more vulnerable with each passing day. Tighter stocks will only leave the oil market trading in an ever more volatile manner,” he added.

Surging oil and energy costs were already creating demand destruction globally, Azimut Group’s co-head of fixed income Nicolo Bocchin warned, adding that even if the waterway reopens, normalization in shipping and trade flows would still take “weeks and weeks.”