MW Global oil prices drop below $106 a barrel on hopes that U.S.-Iran war will soon end
By Isabel Wang and Myra P. Saefong
The EIA on Wednesday reported a significant drop in U.S. crude oil inventories, but oil prices mainly reacted to the potential de-escalation in Iran
President Donald Trump said at the annual congressional picnic on Tuesday that the war in Iran would end "very quickly."
Oil futures were extending their declines on Wednesday following reports that a new round of negotiations between the U.S. and Iran will be held in Pakistan, raising hopes for a resolution to the months-long stalemate in the Middle East.
Saudi Arabian news channels reported on Wednesday that "work is underway to finalize the text of an agreement between Washington and Tehran," adding that "the final version of the agreement between America and Iran may be announced within hours."
Citing sources familiar with the matter, they also reported that "a new round of negotiations between the U.S. and Iran will be held in Islamabad after the Hajj season." The Hajj pilgrimage to Mecca takes place May 25-27 this year.
The White House did not respond to a MarketWatch request for comment.
West Texas Intermediate crude saw its most-active July contract (CL.1) (CLN26) fall 5.1% to $98.94 a barrel, while Brent crude futures for July delivery (BRN00) (BRNN26) were off 5.2% at $105.54 a barrel, according to FactSet data.
On Tuesday, two Chinese tankers carrying crude oil traversed the Strait of Hormuz. A South Korean vessel was also passing through it, according to a Reuters report.
Phil Flynn, senior market analyst at the Price Futures Group, said the tankers moving through the strait offer "a relief valve to the market we did not have before" and noted that another round of peace talks has reportedly been scheduled.
"The odds of the U.S. attacking Iran again have gone down significantly," Flynn told MarketWatch on Wednesday morning.
The big drop in oil prices on Wednesday also came after President Donald Trump said the war in Iran would be ended "very quickly."
"They want to make a deal so badly, they're tired of - this should have happened for 47 years," Trump told members of Congress at the White House's annual congressional picnic on Tuesday. "Somebody should have done something about it. And it's going to happen, and it's going to happen fast. And you're going to see oil prices plummet."
"Headlines suggest that the war is coming to an end, and that has brought some aggressive selling into oil markets," even as U.S. crude inventories continue to draw down, said Denton Cinquegrana, chief oil analyst at Dow Jones Energy. (Dow Jones Energy is a unit of Dow Jones, the publisher of MarketWatch.)
The Energy Information Administration on Wednesday reported a significant drop in U.S. crude oil inventories for the week ending May 15.
Crude stockpiles decreased by nearly 7.9 million barrels. That was a fourth straight weekly decline and substantially surpasses market expectations of a reduction of around 2.5 million barrels.
Nora Redmond contributed.
-Isabel Wang -Myra P. Saefong
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 20, 2026 12:00 ET (16:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments