In a much-needed breather, oil prices tumbled over 5% on Wednesday amid growing hopes of a ceasefire that could ease supply disruptions from the Middle East, a key oil-producing region. The decline followed reports that the U.S. had sent Iran a 15-point proposal aimed at ending the ongoing conflict.

U.S. President Donald Trump said Washington and Tehran are “currently in negotiations” and suggested that Iran is eager to strike a peace deal, even as the Islamic Republic has denied holding any direct talks with the United States.

Crude oil price on March 25

Brent crude futures dropped $6.21, or 5.9%, to $98.28 a barrel by 0058 GMT, after touching a low of $97.57. U.S. West Texas Intermediate crude futures fell $4.67, or 5.1%, to $87.68 a barrel, having slipped earlier to $86.72. This came after both benchmarks had gained nearly 5% on Tuesday, before giving up some of those gains in volatile post-settlement trade.Market participants appear to be reacting to slightly improved expectations of a ceasefire, prompting some profit booking. But uncertainty around the success of negotiations is likely preventing a sharper bout of profit taking.

According to Israel’s Channel 2, the proposal US sent includes a one-month ceasefire to allow discussions, along with provisions for dismantling Iran’s nuclear programme, ending support for proxy groups, and reopening the Strait of Hormuz.
On the diplomatic front, Pakistan’s prime minister on Tuesday offered to host talks between the U.S. and Iran. However, Iran had denied on Monday that it was engaged in any negotiations with the U.S.
Despite these developments, military activity has continued, with strikes by the U.S., Israel, and Iran ongoing. Sources also indicated that Washington is preparing to deploy additional troops to the region.
Despite the possible relief, concerns around the Strait of Hormuz persist. The ongoing conflict has effectively disrupted shipments of nearly one-fifth of global oil and liquefied natural gas passing through the key waterway.

International brokerage Macquarie has said that even if tensions ease in the near term, oil prices are likely to find support in the $85–$90 range, with a gradual move back toward $110 until normal flows through the Strait of Hormuz resume. The note added that if disruptions persist through April, Brent could still climb to $150 per barrel.

Looking ahead, crude prices could move higher from current levels. According to Kayanat Chainwala of Kotak Securities, oil may rise to $120 per barrel in the near term and potentially touch $150 if the conflict continues

Nuvama Institutional Equities echoes the same view. The continued closure of the Strait of Hormuz, which handles around 20 million barrels per day, could push crude prices to the $110–150 per barrel range.

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