Oil prices declined on Wednesday after an initial increase of approximately $1 at the beginning of trading in Asia, as investors evaluated the prospects for U.S.-Iran peace negotiations in light of the U.S. extending a ceasefire. Brent crude futures experienced a decline of 21 cents, equivalent to 0.2%, settling at $98.27 a barrel at 0039, following a peak of $99.38 earlier in the session. West Texas Intermediate futures declined by 28 cents, representing a 0.3% decrease, settling at $89.39, following a peak of $90.71. Both benchmark contracts experienced an increase of approximately 3% on Tuesday. U.S. President Donald Trump announced an indefinite extension of the ceasefire with Iran just hours before its expiration, aiming to facilitate ongoing discussions to resolve a conflict that has resulted in significant casualties and disrupted the global economy.

The action seemed to be one-sided, and it was not promptly evident if Iran or the U.S. ally Israel would consent to prolong the ceasefire that commenced two weeks prior. “With the outcome of talks still unclear and the Strait of Hormuz closed, the market lacks clear direction,” stated Hiroyuki Kikukawa. “Unless fighting resumes, prices are likely to stay near the current levels for now,” Kikukawa stated. Trump also stated that the U.S. Navy would uphold its blockade of Iran’s ports and shore, a move that Iranian leaders have characterized as an act of war. Iran’s highest-ranking officials have yet to provide a response regarding Trump’s extension of the ceasefire.

It is reported that Iran did not request the extension and reiterated its stance on forcibly overcoming the U.S. blockade. On Tuesday, shipping traffic through the Strait of Hormuz, a critical conduit for approximately 20% of global oil and liquefied natural gas supplies, was largely suspended, with shipping data indicating that only three vessels transited the waterway in the preceding 24 hours. In a separate development, the Israeli military reported that Hezbollah launched rockets at its forces in southern Lebanon, alleging that the Iran-supported organization breached a ceasefire in advance of U.S.-facilitated discussions with Lebanon scheduled for this week. No immediate comment was provided by Hezbollah.

In Europe, Ukrainian President Volodymyr Zelenskiy announced that the Druzhba oil pipeline, which transports Russian oil to the continent, is prepared to restart operations. According to three industry sources, Russia is poised to halt oil exports from Kazakhstan to Germany through the Druzhba pipeline beginning May 1. On Wednesday, the U.S. Energy Information Administration is set to release inventory data. Last week, U.S. crude oil inventory experienced a reduction of 4.5 million barrels, following three consecutive weeks of increases. Additionally, both gasoline and distillate stocks also saw a decline, according to market sources.