Oil prices fall as Trump pauses 'Project Freedom', cites progress in peace talks

(Sharecast News) - Oil prices eased back on Wednesday after Donald Trump said he was pausing 'Project Freedom', the US operation to guide ships through the vital Strait of Hormuz, as progress was being made towards a peace deal with Iran.

In a post on Truth Social, the US President said: "Based on the request of Pakistan and other Countries, the tremendous Military Success that we have had during the Campaign against the Country of Iran and, additionally, the fact that Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran, we have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalized and signed."

European stock futures rose on the announcement, while Brent crude was trading down 1.7% at $108.00 a barrel at 0735 BST and West Texas Intermediate was 1.6% lower at $100.64 a barrel.

Patrick Munnelly at Tickmill Group said the move lower in oil looks more like headline relief than a full repricing of supply risk.

"Safe passage for energy cargo through the Strait is still not functioning normally, and the US blockade remains in place for vessels travelling to or from Iranian ports," he said.

"That limits the scope for a deeper near-term fall in crude, particularly as inventory signals are tightening. The API reported an 8.1mn barrel draw in crude stocks for the week ending 1 May, sharply larger than the prior week's 1.8mn draw, while overnight commentary from API and S&P Global Energy pointed to an accelerating pace of inventory depletion."