U.S. Strikes Iran Amid Peace Talks; Oil Prices Fluctuate

Oil prices pulled back from recent highs on Wednesday, erasing some of the previous day's gains as traders sought clarity on negotiations between the U.S. and Iran. Brent crude futures fell $1.42, or 1.43%, to $98.16 a barrel, while U.S. West Texas Intermediate (WTI) crude lost $1.66, or 1.77%, to $92.23 a barrel. The decline followed a surge on Tuesday after the U.S. military carried out strikes in Iran, which Iran condemned as a violation of the ceasefire. The U.S. described the strikes as defensive. Meanwhile, the national average gas price in the U.S. dropped to $4.459 per gallon, continuing a post-Memorial Day decline. Treasury yields also fell as investors remained optimistic about a potential peace deal despite the strikes. European stocks were mixed, with some indexes retreating from recent gains. The STOXX 600 was down 0.2%, while the FTSE 100 rose 0.7%. Oil prices initially rose after the strikes but later fluctuated as traders assessed the impact on global supplies. The Strait of Hormuz, a key conduit for oil and gas, remains a focal point, with some LNG tankers passing through in recent days, raising hopes for a reopening. However, rising hostilities, including increased Israeli bombing in Lebanon, threaten ongoing negotiations. The conflict has disrupted Middle East oil and gas supplies since February, contributing to price volatility. U.S. Secretary of State Marco Rubio suggested that a deal could take a few days, but uncertainty persists. Investors are also monitoring economic data, including April's personal consumption expenditures price index, as inflationary impacts from the conflict intensify.