Crude prices dropped as Trump’s comments on Iran diplomacy reduced geopolitical risk in the market.
Weak Chinese demand and steady supply flows also kept oil under pressure.
Brent and WTI extended losses despite earlier tensions around the Strait of Hormuz.
Oil prices fell after US President Donald Trump said he had cancelled planned military strikes on Iran and suggested that a diplomatic agreement could be close.
Brent crude opened sharply lower, dropping nearly 2% to $88.79 a barrel after closing the previous session near a two-month low. The benchmark later traded at $89.17 a barrel, down $1.21 or 1.3%, while US benchmark West Texas Intermediate (WTI) crude slipped $1.23, or 1.4%, to $86.48 a barrel.
1 June 2026
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The decline extended a broader downtrend in oil prices, with WTI now down more than 10% over the past month. The move came despite earlier tensions in West Asia, including Iran’s announcement of restrictions and threats linked to the Strait of Hormuz, a key chokepoint for global oil flows.
Trump said from the Oval Office that he expects an agreement with Iran could be signed in the coming days and indicated that the Strait of Hormuz would reopen once a deal is finalised. A White House post on X, quoting Trump, said discussions had reached advanced stages and involved multiple countries including Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan and others.
Iran Deal Hopes Calm Oil Markets
Oil markets reacted to easing geopolitical tensions after Trump’s comments, which shifted focus away from potential supply disruptions in West Asia.
Earlier tensions around the Strait of Hormuz had raised concerns over global crude flows, but the market reaction remained relatively muted as traders assessed the likelihood of sustained disruption.
BMO Capital Markets, as cited by CNBC, said crude prices have not reacted sharply to recent US-Iran tensions. It pointed to continued diplomatic activity, other shipping options around the Strait of Hormuz, and softer Chinese oil imports as key factors keeping gains in check.
Weak China Demand Weighs on Prices
China’s slowing appetite for crude has also kept oil prices under pressure. Demand for fuels such as petrol and diesel has weakened, reducing expectations of stronger consumption from one of the world’s biggest energy markets.
Citi, as cited by CNBC, said lower Chinese imports have helped balance global markets and ease fears of supply tightness. It estimates China can maintain imports of around 8.7 million barrels per day without materially drawing down inventories.
US crude inventories fell by 7.2 million barrels in the week ended June 5, compared with expectations of a 4 million-barrel decline. However, this draw was not enough to offset broader pressure from easing geopolitical risks and weaker demand outlook, leaving oil prices lower.
