(RTTNews) – Crude oil prices fell on Tuesday, reversing gains from yesterday’s session, as market sentiment was boosted by US efforts to block the Strait of Hormuz, which eased supply concerns, while rising concerns vanished after US War Secretary Pete Hegseth confirmed that the US-Iran ceasefire remains in place.
WTI crude oil for delivery in June was last seen trading at $102.62 per barrel, down $3.80 (or 3.57%).
The US-Iran war is now in its third month and despite several rounds of talks there appears to be no end to the hostilities. However, the US-declared ceasefire on attacks against Iran is still in place.
Since the beginning of the war on February 28, Iran has effectively closed the Strait of Hormuz and blocked any traffic movement through the channel.
Global oil reserves are near their lowest level in eight years, according to an estimate by Goldman Sachs, Reuters reported. The banking chief estimates reserves stand at 101 days of global demand and could fall to 98 days by the end of this month.
About 20,000 sailors are trapped in some 2,000 ships that have been stuck in the region for more than two months, according to the UN International Maritime Organization.
Intending to control oil prices by reopening the traffic blockade in the Strait of Hormuz, US President Donald Trump launched “Project Freedom”, a plan that involves US ships protecting ships stranded in the Strait of Hormuz area and escorting them to safety.
As a humanitarian gesture of moving all ships from countries not involved in the war out of harm’s way, Trump announced the initiative, saying several countries had asked for US support.
Following the announcement of “Project Freedom”, Iran threatened that ships violating Iran’s directives would face serious risks. Trump warned that if Iranian forces intervened in the operation and attacked any American ship it would be “blown to the ground”.
According to the Joint Maritime Information Center, the US had established an “enhanced security zone” south of normal shipping routes in the strait.
US Central Command said more than 100 land- and sea-based aircraft, guided-missile destroyers and 15,000 service members are involved in the operation.
Following the launch of the project yesterday, the US Central Command announced that two US-flagged merchant ships successfully passed through the strait under US protection and guidance without any untoward incidents.
Earlier, the UAE had said that four critical missiles launched from Iran were successfully shot down. Iranian missile and drone strikes set fire to an oil refinery in the Fujairah oil industry zone in the eastern emirate. Iran’s neighbors condemned Iran over the attacks, while European countries urged Iran to return to talks with the US.
Although concerns had grown about the breakdown of the ongoing ceasefire, traders welcomed the US initiative to restore traffic across the strait with optimism. As a result, crude oil prices fell heavily today.
On May 3, Iran said it was reviewing the latest US plans for a peace deal, but has not yet provided an update.
The current Gulf crisis has led to a tremendous increase in oil and energy prices.
In the US, the average national price of a gallon of gasoline rose to $4.48 from $2.98 before the conflict began.
Experts believe that Trump’s measures to loosen the traffic blockade, if successful, could lead to a decline in oil prices in the near term until a permanent solution is found by both countries to end hostilities.
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