Oil prices fall on report U.S. and Iran closing in on a deal to end war

Oil prices were sharply lower on Wednesday, extending losses after Axios reported that the U.S. and Iran were closing in on an agreement to bring an end to the conflict.

Futures for international benchmark Brent crude for July delivery slid 5.8% to $103.51 per barrel as of 5:07 a.m. ET, while U.S. West Texas Intermediate futures lost 6.4% to $95.76 per barrel.

Axios reported, citing U.S. officials, that the White House believes it is nearing a one-page memorandum of understanding to end the war and establish a framework for more detailed nuclear talks. CNBC could not independently verify the report.

U.S. President Donald Trump on Tuesday announced in a Truth Social post that the U.S. would temporarily halt “Project Freedom,” a military effort launched just a day earlier to escort commercial vessels through the Strait of Hormuz, citing progress in negotiations with Iran toward a final agreement. 

The Trump administration said roughly 23,000 seafarers across vessels from 87 countries have been stranded in the Persian Gulf following Iran’s effective shutdown of the strait.

Surging oil and energy costs were already creating demand destruction globally, Azimut Group’s co-head of fixed income Nicolo Bocchin warned, adding that even if the waterway reopens, normalization in shipping and trade flows would still take “weeks and weeks.”