Oil Prices Decline as U.S. Suspends Project Freedom

Oil Prices Decline as U.S. Suspends Project Freedom

Oil prices declined on Wednesday amid growing optimism over a final agreement between the US and Iran. Brent crude traded at $108.66 per barrel, down around 1.16% from the previous close of $109.87.

US benchmark West Texas Intermediate also decreased about 1.34% to $100.86 per barrel, compared with $102.27 in the previous session.

US President Donald Trump announced Tuesday that the US military will temporarily pause “Project Freedom” to restore freedom of navigation for commercial shipping through the Strait of Hormuz.

The US and Iran have mutually agreed that “Project Freedom” will be paused for a short period “to see whether or not the Agreement can be finalised and signed,” while the US blockade will remain “in full force and effect,” Trump said.

This development eased tensions stemming from the Strait of Hormuz in the region, while raising expectations of diplomatic progress toward ending the war between the US/Israel and Iran.

Meanwhile, data indicating a sharp decline in US crude oil inventories limited the price decline. The American Petroleum Institute estimated that US crude oil inventories fell by 8.1 million barrels last week compared with the previous week.

The decline raised concerns over tightening supply in the country while indicating stronger demand. US Energy Information Administration is expected to release official inventory data later in the day.

Trump Says op to Break Iran’s Strait of Hormuz Blockade to be Paused