Brent crude settled at $91.45 per barrel, down $2.80 (3.0%), while West Texas Intermediate (WTI) crude fell $3.10 (3.4%) to close at $88.20 per barrel.
The decline followed announcements from both Iran and Israel that they had halted direct attacks after President Donald Trump urged the sides to cease hostilities. Although tensions remain elevated, particularly after Israeli strikes in southern Lebanon on Tuesday, markets viewed the pause in fighting as reducing the risk of a prolonged disruption to Middle Eastern oil flows.
Prices briefly recovered some losses after Trump stated that Iran had shot down a U.S. military helicopter operating near the Strait of Hormuz and warned that the United States would respond. However, traders largely focused on growing expectations that negotiations aimed at ending the conflict could advance in the coming days.
Despite the ceasefire, shipping through the Strait of Hormuz remains heavily restricted. Prior to the conflict, the waterway handled roughly one-fifth of global crude oil and liquefied natural gas shipments. U.S. Energy Secretary Chris Wright said vessel traffic and oil exports through the region have increased recently, although significant limitations remain in place.
Additional pressure on prices came from weak demand signals out of China. The country’s crude oil imports fell 29% in May to their lowest level in eight years, extending a prolonged decline in purchases by the world’s largest oil importer.
The U.S. Energy Information Administration (EIA) also released updated forecasts showing the impact of the conflict on global energy markets. The agency projects world petroleum production will decline from a record 106.1 million barrels per day in 2025 to 99.0 million barrels per day in 2026. Global oil demand is also expected to fall, though at a slower pace, prompting increased reliance on stored inventories. As a result, OECD oil stockpiles are projected to decline to their lowest levels since 2003.
Market participants are now awaiting weekly U.S. inventory data. Analysts expect crude stockpiles to have fallen by approximately 3.4 million barrels during the week ended June 5. If confirmed, it would mark the seventh consecutive weekly decline in U.S. crude inventories, highlighting continued tightness in physical oil markets despite the recent decline in prices.