Oil prices have declined after a three-day advance, following a U.S. announcement that Israel and Lebanon have agreed to a ceasefire, a move that would remove a key obstacle in negotiations between Washington and Tehran.

West Texas Intermediate crude fell to around $95 per barrel, having climbed nearly 10% over the first three trading sessions of the week, while Brent crude settled near $98 per barrel on Wednesday. The U.S. State Department stated that the ceasefire is contingent upon Hezbollah completely halting fire and withdrawing all its personnel from areas south of the Litani River.

Although the U.S. and Iran have broadly agreed on a framework to extend a truce for two months and reopen the Strait of Hormuz, negotiations on final details are dragging on as both sides have intensified military strikes. Iran's semi-official Tasnim news agency, quoting the country's foreign minister, reported that talks with Washington have "not made substantive progress" and that Iran is prepared to strike targets within Israel if attacks on Beirut continue.

With the conflict escalating anew, market optimism about extending the current truce—which could potentially resume oil shipments through the strait—has evaporated, erasing last week's price declines. As talks stall, global supply buffers are rapidly depleting. U.S. government data released Wednesday showed crude inventories at Cushing, Oklahoma, the delivery point for WTI, fell for a sixth consecutive week, nearing what is termed the minimum operating level.

U.S. President Donald Trump stated that once Iran signs a memorandum of understanding to halt armed hostilities, the Strait of Hormuz will be opened "immediately," subject to clearing certain areas, including the removal of sea mines. He downplayed the threat these mines pose to commercial shipping.

The primary focus for oil markets remains this critical waterway, through which about one-fifth of global crude typically flows. Fuel prices have risen as the strategic chokepoint has been effectively paralyzed by a dual blockade from Tehran and Washington, with vessel transit still restricted.

Simultaneously, the Republican-controlled House of Representatives passed a measure to halt U.S. involvement in war with Iran, signaling that concern over the conflict is spreading within the President's own party, five months before congressional elections. However, this vote does not end U.S. military strikes against Iran, as the Senate must still pass the resolution, and the specific provision of the 1973 War Powers Act invoked by the House is itself legally contentious.