How Middle East Uncertainty Is Causing Oil Prices to Slide

SINGAPORE — Oil prices tumbled more than 3 percent on Wednesday, reversing earlier gains as persistent volatility in the Middle East rattled markets even amid signs that the US-Israeli war with Iran could be winding down.

Brent crude for June delivery fell $3.33 to $100.64 per barrel, while US West Texas Intermediate slid $3.34 to $98.04.

Prices had risen earlier in the day but turned lower as investors locked in profits. Analysts pointed to signals from Washington suggesting the conflict may be nearing an end.

President Donald Trump told reporters on Tuesday that the US could conclude the military campaign within two to three weeks, his clearest indication yet that he wants to wind down the month-long war.

Still, analysts caution that even if fighting stops, the flow of oil will not return to normal quickly. Shipping costs, insurance rates, and tanker movements will take time to settle, and the full extent of damage to energy infrastructure remains unclear.

OPEC oil output dropped by 7.3 million barrels per day in March compared with the previous month, a Reuters survey showed, reflecting the impact of forced export cuts due to the closure of the Strait of Hormuz. Roughly 20 percent of global oil and liquefied natural gas trade typically passes through the waterway.

“Even with diplomatic channels reportedly still active and intermittent comments from the US administration predicting a short end to the conflict, the combination of limited tangible diplomatic progress, continued maritime attacks and explicit threats against energy assets keeps supply risks skewed to the upside,” LSEG analysts said in a note.

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