Oil prices declined on Wednesday as investors remained cautious over the prospects for US-Iran peace talks, following President Donald Trump’s eleventh-hour decision to extend a two-week ceasefire while maintaining a blockade of the Strait of Hormuz.
With the truce due to expire, Trump announced he would delay the deadline indefinitely after a request from Pakistan, giving Tehran more time to present a formal proposal. “I have directed our Military to continue the blockade and, in all other respects, remain ready and able,” he posted on social media, citing the need for Iran’s “fractured” leadership to form a response.
The decision to avoid immediate military action but keep the waterway closed left markets awaiting further clarity. White House officials indicated that Vice President JD Vance would not travel to Islamabad for scheduled talks, pending receipt of Iran’s proposal. Tehran has stated it will not attend, citing what it calls unreasonable US demands, with Iranian state media suggesting no prospect of negotiations in the near term.
Christopher Wong, a strategist at Oversea-Chinese Banking Corp, noted that both sides appeared to be “playing a game of who blinks first,” adding that the ongoing uncertainty could limit risk appetite, though markets might rally once a breakthrough emerges.
Both main oil contracts fell after rising nearly 3% the previous day. Equity markets were mixed: Hong Kong, Sydney, Singapore, Manila, Mumbai, and Jakarta declined, while Tokyo, Shanghai, Seoul, Taipei, and Wellington gained. London opened higher despite UK inflation jumping to 3.3% in March, driven by rising energy prices linked to the Middle East conflict. Paris and Frankfurt also advanced.
Traders have struggled for direction this week after Iran initially signalled it would reopen the Strait of Hormuz—closed since the conflict began on February 28—before reversing course due to the US blockade and the seizure of a vessel. Trump has accused Tehran of violating the ceasefire by harassing ships in the critical waterway, through which roughly one-fifth of global oil transits.
Fawad Razaqzada, an analyst at FOREX.com, warned that failure to reach a deal could push oil prices back above $100 a barrel, likely pressuring equities.
Markets are also watching the confirmation hearing for Kevin Warsh, Trump’s nominee to replace Federal Reserve Chair Jerome Powell. Warsh pledged to preserve the central bank’s independence, insisting he would not be a “puppet” of the president, who has criticised Powell for not cutting rates more aggressively.
At 0715 GMT, West Texas Intermediate crude was down 1.1% at $88.73 a barrel, while Brent North Sea crude fell 0.8% to $97.71. The Nikkei 225 rose 0.4% in Tokyo, while the Hang Seng Index dropped 1.2% in Hong Kong. The euro strengthened slightly against the dollar, and the pound edged higher, while the dollar weakened against the yen.
