Patrick Romero
Brent crude oil prices dropped below $74 a barrel on Wednesday, touching a level last seen at the outbreak of the Iran conflict on February 28. The slide reflects a combination of recovering tanker traffic through the Strait of Hormuz and growing expectations that Iranian crude could return more fully to global markets.
At a Glance
- Brent crude fell just below $74 a barrel, down nearly 40% from its wartime peak of around $118
- UAE oil exports have rebounded to roughly 85% of prewar levels, hitting about 4.3 million barrels per day in early June
- Gold fell below $4,000 per ounce for the first time since November 2025
- Wall Street now puts an 85% probability on a Federal Reserve rate hike this year, up from 60% a week earlier
- President Trump directed the Justice Department to investigate oil companies for price gouging
Oil Prices Keep Sliding as Hormuz Traffic Recovers
The Strait of Hormuz was handling roughly 125 to 140 vessel crossings per day before the conflict began, moving around 20 million barrels of oil and petroleum products daily. That volume represents about a quarter of global seaborne oil trade. Months of disruption slashed those flows, but traffic is now gradually climbing back, even if it has not yet returned to prewar norms.
The International Energy Agency reported that UAE oil exports reached approximately 4.3 million barrels per day in early June, up sharply from just 1.9 million barrels per day in March. Progress in US-Iran peace talks has added to the optimism, with traders increasingly pricing in the prospect of Iranian crude exports resuming more fully under a temporary sanctions waiver. Disagreements over nuclear inspections and the broader sanctions framework remain unresolved, though, leaving real uncertainty about how lasting any deal will be.
US benchmark crude settled at $70.36 a barrel by 3 pm CEST on Wednesday. Before the war, it was trading around $67 a barrel. Brent has been trading below $80 in recent days but remains above the $72.48 level recorded the day before the conflict started.
Trump Targets Oil Companies Over Pump Prices
President Donald Trump took aim at energy companies early Wednesday, saying on social media that gasoline prices are not falling fast enough to reflect the drop in crude oil. He announced that he had instructed the Justice Department to begin investigating oil companies for price gouging.
According to AAA, the national average for gasoline stood at $3.93 a gallon as of Wednesday. Prices at the pump have come down over the past month, but the gap between crude benchmarks and retail fuel costs has clearly frustrated the White House. "Gasoline prices better start going down a lot faster than what I'm seeing," Trump wrote in his post.
Gold Breaks Below $4,000 as Dollar and Rates Weigh
Gold slipped below the $4,000 per ounce threshold on Wednesday for the first time since November 2025. Two forces drove the move: a stronger US dollar, which makes dollar-priced gold more expensive for buyers holding other currencies, and a sharp repricing of Federal Reserve policy expectations.
The Fed struck a hawkish tone at its most recent policy meeting, signaling at least one more rate increase before year end. Markets responded quickly. The probability of a rate hike this year, as tracked by CME Group data, jumped to 85%, up from 60% just one week earlier. Higher rates tend to hurt gold because they raise the opportunity cost of holding a non-yielding asset.
Bond yields stayed elevated amid concern about the inflationary effects of higher energy prices. The 10-year US Treasury yield stood at 4.48% early Wednesday. Investors are also watching Thursday's release of the Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, for clearer signals on the rate path ahead.
European Markets Post a Mixed Session
Across the Atlantic, European equities were uneven by the afternoon. Germany's DAX dropped 1.1%, while France's CAC 40 edged up 0.4%. Britain's FTSE 100 was essentially flat on the day.
Frequently Asked Questions
Why are oil prices falling even though the Iran conflict is not fully resolved?
Prices have declined because tanker traffic through the Strait of Hormuz is recovering and traders are pricing in the possibility that Iranian crude exports could return to the market under a temporary sanctions waiver. Brent is down nearly 40% from its wartime high of around $118 a barrel.
What is the Strait of Hormuz and why does it matter for oil?
The Strait of Hormuz is a narrow waterway connecting the Persian Gulf to the Gulf of Oman. Before the conflict it handled about 20 million barrels of oil and petroleum products per day, roughly a quarter of all seaborne oil trade globally.
Why did gold fall below $4,000 per ounce?
A combination of dollar strength and rising interest rate expectations pushed gold lower. The Federal Reserve's hawkish signals lifted the market implied probability of a rate hike to 85%, reducing demand for non-yielding assets like gold.
What is the PCE price index and why are markets watching it?
The Personal Consumption Expenditures price index is the Federal Reserve's preferred measure of inflation. Thursday's release is expected to give investors clearer guidance on whether the Fed will raise rates again before the end of the year.
What Comes Next for Energy and Markets
The direction of oil prices from here depends heavily on whether US-Iran negotiations produce a durable agreement and how quickly Hormuz traffic returns to prewar volumes. Thursday's PCE reading will be the next major test for gold and bond markets, and potentially for equities too, if it forces a further repricing of Fed expectations.
