Oil prices decided to take a well-deserved nap on Wednesday, slipping in Asian trade after President Donald Trump dangled the possibility of actually talking to Iran instead of just shooting at it. The global benchmark Brent crude dropped 1.7% to $108 a barrel, while US-traded oil fell 1.6% to $100.60 - a welcome comedown after prices had surged over 6% earlier in the week when Middle Eastern attacks got a bit too lively.
The trigger? Trump announced the US would pause Project Freedom, the military operation to guide ships through the Strait of Hormuz - a move that had previously escalated attacks in the region - to see if a deal could actually be hammered out. "Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran," Trump posted on social media, adding the pause would be "for a short period of time."
Of course, the US will keep blocking ships to and from Iranian ports, because nothing says "good faith negotiation" like a continued economic chokehold. But to traders, even a temporary timeout is a signal. "It's a sign that Washington is willing to give diplomacy another chance," said Charu Chanana from investment firm Saxo, though she quickly added it's not exactly a turning point. "The key question for oil traders is whether this leads to real progress in reopening trade through the Strait of Hormuz. For now, there is little evidence of that."
Global energy prices have been on a rollercoaster since Tehran threatened to attack ships crossing the strait - which handles about a fifth of the world's oil and gas shipments - in retaliation for US-Israeli strikes that began on February 28. A conditional ceasefire announced on April 8 and later extended helped calm things, but Project Freedom had been testing those limits. The US said it struck several Iranian "fast boats" in the channel, while the United Arab Emirates accused Iran of hitting one of its oil ports (a claim Tehran denies).
Secretary of State Marco Rubio told reporters the initial US-Israeli offensive in Iran was over, as Washington's objectives had been met. "We would prefer the path of peace. What the president would prefer is a deal," Rubio said. Iran has not responded to those remarks, but parliamentary speaker Mohammad Ghalibaf earlier offered this cheery note: "We know well that the continuation of the status quo is intolerable for America, while we are just getting started." So, diplomacy it is - for now.