Sentiment was influenced by conflicting signals around Iran-U.S. relations. While some reports suggested Washington and Tehran were close to a possible agreement to end the war, U.S. President Donald Trump struck a more aggressive tone on Wednesday.
In a Truth Social post, he warned that Iran would be bombed “at a much higher level” if it failed to accept a peace deal, underlining how fragile the negotiations remain.
Crude oil price on May 7
Brent crude futures for July rose 0.91% to $102.19 per barrel. West Texas Intermediate futures for June gained 1.23% to $96.25 per barrel.
Trump also referred to the U.S. military campaign, called Operation Epic Fury, saying it would conclude if Iran agreed to the terms reportedly on the table, though he noted that this outcome was uncertain. He added that if Iran complied, the U.S. naval blockade of Iranian ports in the Gulf of Oman would end, which would then “allow the Hormuz Strait to be OPEN TO ALL, including Iran.”He further cautioned that if no agreement is reached, “the bombing starts,” and would be “at a much higher level and intensity than it was before.”These remarks followed an Axios report stating that the U.S. and Iran were close to a one-page, 14-point memorandum of understanding. The draft is said to outline an end to the conflict and set the basis for further negotiations.The report added that the U.S. is expecting Iran’s response on several key issues within the next 48 hours. While no final agreement has been reached, sources said the two sides are closer than at any point since the conflict began.
Iranian Foreign Ministry spokesperson Esmaeil Baqaei said on Wednesday that Tehran was still reviewing the proposal and would submit its response through mediators in Pakistan. In a post on X, he referenced a 2011 International Court of Justice ruling, stressing that genuine negotiations require “good faith” and are not meant to involve “disputation,” “dictation,” “deception,” “extortion” or “coercion.”
Market analysts said risks remain elevated. Haitong Futures noted that the current ceasefire could prove temporary, and that stalled U.S.-Iran talks may trigger renewed escalation, which would likely push oil prices higher.
Nuvama Institutional Equities added that if the Strait of Hormuz were to remain shut for an extended period, it could disrupt roughly 20 million barrels per day of crude flows. In that scenario, oil prices could potentially rise into the $110 to $150 per barrel range.
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