Oil prices declined on Wednesday, settling lower after paring steeper intraday losses, as markets reacted to ongoing diplomatic developments surrounding the conflict in the Persian Gulf. Brent crude settled at $102.22 per barrel, down $2.27 or 2.2%, while U.S. West Texas Intermediate (WTI) crude settled at $90.32 per barrel, down $2.03 or 2.2%. Earlier in the session, Brent had fallen by as much as 7% before recovering.
Price action continues to be driven by shifting expectations around potential de-escalation, as Iran reviews a U.S. proposal to end the conflict. While initial reactions have been negative, the absence of a formal rejection has introduced some uncertainty into the market, contributing to intraday volatility. At the same time, geopolitical rhetoric remains firm, limiting confidence in a near-term resolution.
Crude markets remain highly reactive to headlines, with elevated volatility persisting. Recent price swings have pushed 30-day historical volatility to its highest levels since April 2022.
Fundamentally, the supply outlook remains constrained. Shipments through the Strait of Hormuz—typically accounting for roughly one-fifth of global crude and LNG flows—remain largely disrupted, sustaining what is considered one of the most significant supply shocks on record. The cumulative loss of supply since the onset of the conflict has been substantial, tightening global balances.
Additional global supply risks persist. Russian export flows from key Baltic ports faced disruptions following drone attacks, further constraining availability. Meanwhile, selective easing of sanctions has enabled limited flows of Iranian supply to re-enter the market, particularly into Asia.
In the United States, inventory data showed a build of 6.9 million barrels of crude for the week ended March 20, significantly exceeding expectations for a 500,000-barrel increase and adding a modest bearish signal to the market. No releases from the Strategic Petroleum Reserve were recorded during the period.