U.S. crude futures opened sharply lower on Wednesday as market participants reacted to reports suggesting progress toward a ceasefire in the Middle East could reduce strains on global oil supply. Early trading saw U.S. West Texas Intermediate (WTI) crude fall to a session low of $87.80 a barrel, before trading at $88.86 a barrel as of 2305 GMT - a decline of $3.49, or 3.8%.
The move followed earlier signs of volatility in the market. WTI had climbed 4.8% on Tuesday, only to give back a portion of those gains in what Reuters described as volatile post-settlement trading.
Reports circulating on Tuesday said Washington had delivered a 15-point settlement proposal to Tehran. U.S. President Donald Trump said the United States was making progress in negotiations aimed at ending the war with Iran and said his administration had secured an important concession from Tehran. A source cited by those reports confirmed that the 15-point plan had been sent.
Israel's Channel 12, identified as the first outlet to report the plan, said the measures include a mechanism under which a one-month ceasefire would be announced. The channel said U.S. Middle East envoys Steve Witkoff and Jared Kushner are working on that mechanism.
Responses from Tehran were mixed. Iran has denied that direct talks with the United States have taken place. Mohammad Baqer Qalibaf, speaker of Iran's parliament, dismissed the reports as "fake news."
The reported diplomatic movement and the contrasting official reactions together appeared to drive short-term shifts in oil prices, as traders assessed the likelihood that any deal could alleviate disruptions to crude supply. The developments underscore ongoing market sensitivity to geopolitical signals tied to the Middle East and to any prospective steps that might change the supply outlook.
Summary
U.S. crude futures fell roughly 4% after reports that Washington sent Tehran a 15-point settlement proposal potentially paving the way for a one-month ceasefire. Prices initially hit $87.80 at the open and were $88.86 at 2305 GMT, down $3.49 or 3.8%. Tehran denied direct talks and an Iranian parliamentary leader called the reports "fake news."