Oil prices fall 4% after Rubio says U.S. will give Iran diplomacy 'every chance to succeed'

Oil prices experienced a notable decline on Wednesday, as Secretary of State Marco Rubio announced that the U.S. is committed to giving negotiations with Iran "every chance to succeed."

By 12:35 p.m. ET, West Texas Intermediate (WTI) futures had dropped more than 4%, trading at $89.93 per barrel. Similarly, the international benchmark Brent crude witnessed a decline of nearly 4%, settling at $95.68 per barrel.

During a Cabinet meeting at the White House, Rubio indicated that advancements have been made in discussions with Iran. He underscored President Donald Trump's preference for a diplomatic resolution, while also alluding to alternative measures should diplomatic efforts falter, likely referencing the possibility of renewed military actions.

Rubio stated, "The bottom line is that we prefer the negotiated diplomatic route and we're going to give it every chance to succeed."

In a related development, Iranian state television reported that Tehran has pledged to restore commercial traffic through the Strait of Hormuz to levels seen prior to the conflict within one month post-agreement with the U.S., as per Reuters.

This report suggested that Iran would oversee ship traffic in the strait with support from Oman, amid ongoing negotiations.

Contrarily, the White House refuted the validity of this memorandum of understanding claim, labeling it as "a complete fabrication" in a social media announcement.

The ongoing situation finds Iran and the U.S. at a critical juncture, balancing between reaching a deal and potential military escalation. U.S. forces recently conducted strikes in southern Iran, which the Pentagon characterized as defensive in nature. In response, Tehran has vowed to retaliate.

Industry experts express skepticism regarding the swift restoration of oil flows to prewar levels.

Sultan Ahmed al-Jaber, head of Abu Dhabi National Oil Co., indicated last week that even with the cessation of hostilities, it would take a minimum of four months to increase oil flows to 80% of regular levels. He projected that full normalization could extend until the first or second quarter of 2027.