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The information provided on EL7.AI is for educational and informational purposes only and does not constitute financial advice.
U.S. crude futures fell more than 2% in early Asian trade on Tuesday following a significant shift in geopolitical rhetoric. President Donald Trump announced that he had paused a planned military attack on Iran to allow for potential negotiations. The move is intended to create space for diplomatic efforts to resolve ongoing tensions in the Middle East.
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Sign InThe sudden de-escalation reduced the geopolitical risk premium that had been priced into crude markets over recent sessions. Per market data, the decline occurred despite the API Crude Oil Stock Change report showing a drawdown of 2.188 million barrels on May 12, 2026. Additionally, broader market sentiment was influenced by U.S. inflation data, which reached 3.8% annually as of May 12, 2026, potentially impacting long-term energy demand forecasts.
Market participants are now watching key support levels for U.S. crude following the price drop. Looking ahead, the WASDE report scheduled for May 12, 2026, and upcoming official inventory data will be critical catalysts for price action. Traders remain cautious as they monitor whether the pause in military action leads to a sustained diplomatic breakthrough or remains a temporary reprieve.
Update: Oil prices have maintained a foothold above the $110 psychological level despite the recent slump, as traders express growing skepticism over the risk of further military escalation. Market participants noted that after multiple passed deadlines, the impact of geopolitical threats on price volatility appears to be diminishing.
Update: Brent front-month futures traded at $109.70 per barrel, down 2.11%, while West Texas Intermediate (WTI) stood at $102.80, down 1.55%. This downward move follows a price surge on Monday triggered by reports of drone strikes targeting infrastructure in the UAE and Saudi Arabia.