Oil prices have dropped to their lowest level in seven weeks, with Brent crude futures briefly falling below $90 per barrel before staging a slight recovery.
On Tuesday, comments from U.S. Energy Secretary Chris Wright at the Atlantic Council Global Energy Forum contributed to the decline. Wright stated that vessel traffic transiting the Strait of Hormuz was increasing "very significantly," which pushed Brent crude futures down by nearly 5% at one point, breaking below the $90 mark.
The decline was initially triggered by remarks from former President Donald Trump, who suggested a U.S.-Iran agreement could be reached within "two to three days." Secretary Wright's comments then drove prices lower again.
Subsequently, a report from Xinhua News Agency cited Trump stating on social media that Iran had shot down a U.S. Apache helicopter in the Strait of Hormuz. While the two pilots were reported safe, Trump asserted that the United States "must respond" to the attack. This news prompted oil prices to halt their slide and rebound.
At the time of writing, Brent crude futures were down 2.86%, trading at $91.55 per barrel. This represents the lowest settlement price for Brent since April 17 and marks the first time since January that it has closed below its 100-day moving average, a key technical support level.
Trump's Comments on a Potential Deal
Despite recent violent clashes between Israel and Iran, former President Trump has sought to reassure markets that an agreement with Tehran to reopen the Strait of Hormuz is imminent, stating it was a matter of "two to three days."
In remarks to reporters, Trump referenced the recent "back and forth" between Israel and Iran and noted they had "agreed to a ceasefire." He characterized negotiations as being at the "very end" and predicted a "very, very good deal." When asked about the timeline, he reiterated the "two to three days" estimate.
Trump has repeatedly indicated a deal to reopen the vital waterway was close, though it has yet to materialize. A fragile ceasefire implemented in April was nearly shattered this week following Iranian missile strikes in retaliation for an Israeli attack on Lebanon, which prompted an Israeli counterstrike.
Trump reportedly pressured Israeli Prime Minister Benjamin Netanyahu to show restraint and avoid further attacks, warning that Israel could find itself isolated if it reopened conflict with Iran. Netanyahu later stated in a televised address that the current round of strikes on Iran was "paused."
The violent clashes briefly pushed oil prices higher on Monday, but the current exchange of fire appears to have ended without further escalation, with both Iran and Israel indicating a ceasefire is in place.
Analyst Perspectives on Flows and Inventories
Analysts at JPMorgan Chase & Co. suggest the volume of oil transiting the Strait of Hormuz may be higher than publicly visible data indicates. The bank estimates that up to 2 million barrels per day might be shipped on tankers that have turned off their transponders.
In a June 4 report, JPMorgan analysts noted that "despite the ongoing maritime blockade and a sharp decline in commercial traffic, a surprising amount of crude and oil products still appears to be moving through the strait."
Oil industry executives and analysts note that crude prices remain relatively muted compared to the scale of supply disruptions, partly due to a buffer provided by global inventories. However, they warn that as these stocks deplete rapidly and summer demand peaks, prices could surge significantly later this year.
The U.S. Energy Information Administration (EIA) forecasts that the Iran conflict will reduce global oil production to an average of 99 million barrels per day in 2026, down from a record 106.1 million in 2025.
The EIA also predicts global oil demand will fall to 102.9 million barrels per day in 2026 from a record 104 million in 2025. It further states that countries will draw on inventories to meet needs, which is expected to push stockpiles in OECD nations to their lowest level since at least 2003, when the EIA began compiling the data.
The oil market is awaiting weekly inventory reports from the American Petroleum Institute (API) and the EIA on Wednesday. Analysts estimate U.S. crude inventories fell by 4 million barrels in the week ending June 5. If accurate, this would mark the first seven-week consecutive drawdown since January 2025. In the same week last year, inventories fell by 3.6 million barrels.
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