Crude oil prices swung wildly this week after reports emerged Wednesday that the United States and Iran were nearing a deal to end the war, triggering the sharpest single-day decline since the conflict began in late February. On Thursday, prices continued to slide, with Brent crude falling more than 2% to around $99 a barrel and West Texas Intermediate dropping to $93, as a new report from Al Arabiya suggested understandings had been reached to ease the US blockade of Iranian ports in exchange for a gradual reopening of the Strait of Hormuz.
The Wednesday Crash
Oil prices plummeted more than 7% on Wednesday after Axios reported that the White House was close to finalizing a one-page, 14-point memorandum of understanding with Iran aimed at formally concluding hostilities. Brent crude briefly fell below $100 a barrel — its lowest in two weeks — while WTI shed nearly 7%. European natural gas prices also dropped sharply. The sell-off was fueled by President Trump’s decision earlier in the week to pause “Project Freedom,” the US military’s escort operation through the Strait of Hormuz, as a gesture toward ongoing negotiations.
However, the crash was tempered by mixed signals. Trump himself called it a “big assumption” that Iran would accept the proposal and warned of resuming bombing if Tehran did not comply. Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said the country had not yet issued a formal response, stating that “the examination of the exchanged texts is still in progress”.
Suspicious Trading Under Scrutiny
Market observers flagged what they called extraordinary trading activity ahead of the Axios report. According to analysis by The Kobeissi Letter, cited by Business Insider, nearly 10,000 crude oil contracts worth approximately $920 million in notional value were shorted at 3:40 a.m. ET on Wednesday — roughly 70 minutes before the Axios story broke at 4:50 a.m. ET. By 7:00 a.m. ET, those positions had gained an estimated $125 million as oil prices fell more than 12% at their session lows. The pattern echoes earlier episodes during the conflict that have drawn congressional scrutiny; Rep. Sam Liccardo has probed multiple suspicious trades timed to war-related announcements.
Uncertain Path Forward
The proposed memorandum would require Iran to suspend uranium enrichment for at least 12 years in exchange for lifted sanctions and the release of frozen assets, with both sides agreeing to reopen the Strait of Hormuz within 30 days of signing. But a senior Iranian lawmaker described the US proposal as “more of a wish list than a realistic plan,” and Trump said Thursday it was “too soon” for face-to-face talks.
Analysts cautioned that even a signed deal would take weeks to restore oil flows. “If a formal deal eventually materialises, oil prices could witness a free fall as geopolitical premiums rapidly evaporate,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. “However, any fresh signs of attacks on oil infrastructure could easily trigger another parabolic spike”.
