Crude oil slides to $107/bbl after Trump pauses plan to escort ships in Strait of Hormuz; gold jumps 1.5%

Crude oil prices in the global market dropped to near $107 per barrel (bbl) region during the early market hours on Wednesday, May 6, India time, after investors focused on US President Donald Trump’s announcement to pause 'Project Freedom,' in which the US Navy was escorting ships out of Iran amid Strait of Hormuz closure.

Latest media reports also suggest that the US Secretary of State, Marco Rubio, in an announcement on Tuesday, indicated that the initial US military operation in the US-Iran conflict is coming to an end.

Global benchmark Brent crude oil prices dropped to near $107 per bbl from $110 per bbl levels as investors still gauge the impact and the current dynamics of the West Asia conflict. The crude oil prices remained elevated, surging to an intraday high of $114.44 per bbl on Tuesday, May 5.

The US-based West Texas Intermediate (WTI) crude oil prices were trading around $105 per bbl levels on Tuesday, after which, during the early hours on Wednesday, May 6, India time, the prices dropped to near $100 per bbl.

Oil prices today

As of 7:24 am (IST), the Brent crude oil prices were trading 2.34% lower at $107.89 per bbl on Wednesday, May 6, compared to ₹110.43 per bbl at the previous market close, according to Investing.com data.

Data also showed that Brent has dropped 8.58% in the last five commodity market sessions.

The WTI crude oil prices were trading 1.68% lower at $100.59 per bbl as of 7:26 am (IST), compared to $102.27 per bbl at the previous commodity market close, as per the exchange data. WTI crude prices have dropped 5.9% in the past one week.

US-Iran conflict update

Oil prices dropped to $107 per bbl, yet remained elevated at a higher level on Wednesday, May 6, after US President Donald Trump announced that “great progress” had been made towards a potential peace deal between the United States and Iran amid the ongoing conflict.

However, Trump has not specified any updates on the same, hence the investors remained cautious in trading the commodities in the global market.

Trump also disclosed that he has ordered the US forces to temporarily pause the 'Project Freedom,' which was announced earlier this week, where the US Navy was escorting ships out of Iran amid the Strait of Hormuz closure.

“While the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalised and signed,” said Trump in his Truth Social post.

According to a BBC report, US Secretary of State Marco Rubio said that the initial US-Israeli military action in Iran, also known as ‘Operation Epic Fury’, was over after achieving its objectives, and now the Western nation is looking for a “path of peace.”

“We would prefer the path of peace. What the president [Donald Trump] would prefer is a deal,” Rubio told the reporters at the White House on Tuesday evening.

Gold prices today

The New York Mercantile Exchange-based COMEX gold prices were trading 1.5% higher at $4,636.10 per ounce as of 9:48 pm (ET) in United States on May 5, compared to $4,568.50 per ounce at the previous market close, according to the official data.

Gold prices became more attractive to investors on May 6, after the US dollar took a demand hit as the United States paused its actions in the Strait of Hormuz. With a lower dollar rate in the market, the traders tend to buy more of the precious yellow metal gold as they will receive more quantity at the same price.

Data collected from the Bloomberg US dollar spot index (DYX) showed that the greenback was trading 0.21% lower at 98.237 as of 9:49 pm on Tuesday, May 5, in United States, compared to the previous currency market close.

Although gold was trading higher, experts still suggest that Wednesday’s recovery in precious metal prices comes with a keen eye on the West Asia conflict prevailing in the market due to the daily dynamic geopolitical developments in the region.