U.S. oil falls 3% amid hopes that Hormuz traffic will be restored

U.S. crude oil prices cut losses Wednesday after the White House rejected as a “complete fabrication” a report that a framework deal with Iran would reopen the Strait of Hormuz to commercial traffic within a month.

According to reports, West Texas Intermediate futures fell 3.4% to $90.71 per barrel by 11:05 a.m. Eastern time. The international benchmark, Brent crude, slid 2.9% to $96.64.

Prices had tumbled further earlier in the session, with WTI dipping below $90, following an Iranian state television report that Tehran had committed to restoring commercial shipping through the strategic waterway to prewar levels within one month of an agreement with the United States, according to Reuters.

But the White House swiftly pushed back.

“The report about a memorandum of understanding is a complete fabrication,” a White House official said.

The Iranian report, which envisioned Iran managing ship traffic through the strait with cooperation from Oman, surfaced as negotiations remain ongoing. President Donald Trump also is preparing to meet with his Cabinet.

The denial comes amid volatile swings between hopes for a diplomatic breakthrough and fears of military escalation. This week, U.S. forces launched strikes in southern Iran in what the Pentagon described as defensive action. Tehran has vowed to retaliate.

Even if the conflict ended immediately, industry veterans remain skeptical that oil flows would quickly return to prewar levels.

Sultan Ahmed al-Jaber, head of Abu Dhabi National Oil Co., said last week it would take at least four months to ramp oil flows to 80% of normal levels. Full normalization is not expected until the first or second quarter of 2027, he said.