Crude Oil Tumbles As U.S. Efforts To End War Ease Oil Transit Concerns

(RTTNews) - Crude oil has slumped on Wednesday after reports of the U.S. sending a 15-point peace proposal to Iran to end the ongoing gulf war eased transport concerns via the Strait of Hormuz.

WTI Crude Oil for May delivery was last seen trading down by $2.22 (or 2.40%) at $90.13 per barrel.

Geopolitical tensions and transit concerns due to the ongoing gulf war eased after U.S. President Donald Trump reiterated that Iran was engaged in talks with the U.S. to end the war.

Yesterday, while insisting that Iran wants a deal badly, Trump stated that the nation gave the U.S. a "very big present" worth a tremendous amount of money.

Sharing no specific details, Trump stressed that it was not related to nuclear issues but to oil and gas and the Strait of Hormuz.

Experts construed from Trump's claims that Iran could allow opening the Strait of Hormuz, which could result in free transport of oil and energy vessels across the narrow seaway soon.

Since the start of the gulf war on February 28, the critical waterway that runs across Iranian borders, has been closed by Iran's forces for all vessels except for a few linked to China, India, and Pakistan.

As a result, oil and energy tankers from Arab nations have been stranded at sea, compelling Arab countries to scale down or halt production, resulting in a steep increase in oil prices.

Today, the Associated Press carried a report quoting officials of Pakistan as stating that Iran has been delivered a 15-point peace plan from the U.S.

Reportedly, central to the plan is the demand for Iran to rollback its nuclear program in exchange for lifting of U.S. sanctions on Iranian oil exports.

Citing unnamed sources, the New York Times, Reuters, and Israel's Channel 12 also confirmed this development.

While Iran's state-run news agency Fars reported that Iran dismissed any ceasefire plan, Iran neither confirmed or denied it officially.

Though a few high-level officials from Iran disputed Trump's claims, oil prices corrected today, anticipating smooth movement of vessels via the strait.

Still, geopolitical tensions continue to simmer as the Pentagon is preparing to send around 3,000 airborne troops from the U.S. Army's 82nd Airborne Division to the gulf.

Iran threatened to shut the Bab el-Mandeb Strait and thereby block the Red Sea if there is a ground attack on Iran.

Israel's military announced setting off a fresh wave of attacks on Tehran.

Iranian drones targeted a fuel tank at Kuwait International Airport causing a fire.

A missile struck Iran's Bushehr Nuclear Power Plant's site (located on the Persian Gulf coast) though no damage to the nuclear reactor or casualties were reported. Of note, this is the second such incident.

However, the International Atomic Energy Agency's Director General Rafael Mariano Grossi called for "maximum restraint" and avoid nuclear safety risks.

On the inventory front, data from the American Petroleum Institute revealed that crude oil inventories increased by 2.3 million barrels for the week ending March 20, topping up on a 6.6-million-barrel rise in the previous week, against expectations of a 1.3-million-barrel decline.

According to the U.S. Energy Information Administration, for the week ending March 20, crude oil inventories in the U.S. increased by 6,926,000 million barrels. At the Cushing, Oklahoma delivery hub, inventories climbed by 3,421,000 barrels.

For the same period, gasoline inventories decreased by 2,593,000 barrels (falling for the sixth time consecutively).

However, distillate inventories increased by 3,032,000 barrels while heating oil inventories decreased by 241,000 barrels, the largest decline since early January.

The U.S. dollar index was last seen trading at 99.49, up by 0.30 points (or 0.30%) today.