(Bloomberg) -- Oil fell in a volatile session, with traders focused on whether US President Donald Trump will soon declare an end to the war in Iran.

West Texas Intermediate futures crude slid 1.2% to settle just above $100 a barrel, after earlier one point slumping roughly 4.8%.

Trump posted on his Truth Social network early Wednesday that Tehran had asked for a ceasefire, sending prices down as traders anxiously await more movement through the vital Strait of Hormuz, which has been effectively blocked by Iran since the war began in late February. The Islamic Republic retorted that the waterway won’t be reopened based on the US leader’s “absurd displays” and that the future of the key transit route will be decided by Iran and Oman.

Trump, in a primetime address later Wednesday, is set to tout US military achievements and stress that the conclusion of operations may come in two-to-three weeks, according to a White House official.

Crude prices are still about 40% higher than they were before March as the war continues to squeeze flows through Hormuz, the conduit for about a fifth of the world’s oil. The International Energy Agency has called it the biggest supply disruption ever and prices for some fuels have at times topped $200 a barrel.

In the event that the US withdraws, it’s unclear how quickly Hormuz traffic could resume — if at all — and Trump has repeatedly indicated that US allies would have to help secure the strait. Any increases in energy output from the region would also take time, though a detente would lower the risk of further damage to infrastructure.

“All eyes, ears and fingers on the buy or sell button are waiting for tonight,” said Carl Larry, an oil and gas analyst at Enverus. “There’s not a lot of opportunity to see a lot lower, but in the moment anything is possible. $100 oil is the sticking point and we’ll play around that number until the next actionable news drops.”

The value of several deferred contracts has weakened over the past few sessions, in a sign that traders are hedging for increasing supply in the coming months. Still, market volatility is hovering near multi-year highs, with many investors winding down position sizes to avoid extreme price swings.

The jump in energy prices driven by the effective closure of Hormuz has raised fears of an inflation crisis. The retail price of US gasoline this week topped $4 a gallon for the first time since August 2022, which will likely heap more pressure on Trump.

Trump has regularly vacillated between saying an Iran deal is imminent and warning he’s prepared to ramp up military operations. A third US aircraft carrier strike group is currently heading to the Middle East, suggesting a possibility of further escalation of the US-Israel led conflict. The wide range of possible outcomes has pushed investors into options betting on everything from a market collapse to $450 oil.

On the physical front, US crude stockpiles rose by about 5.5 million barrels, the highest since June 2023, weekly figures from the Energy Information Administration showed. The prices for a clutch of Atlantic-linked crude grades hit fresh multi-year highs on Wednesday, as demand jumps for replacements for shut-in Middle Eastern supplies.

Iranian Demands

US officials haven’t explicitly specified to whom they’re talking with in Iran. Trump dispatched Vice President JD Vance to deliver an ultimatum to Tehran to make a deal or face attacks on key infrastructure.

Iranian President Masoud Pezeshkian, in a letter to Americans on Wednesday, said the country did not choose conflict. “What Iran has done—and continues to do—is a measured response grounded in legitimate self-defense, and by no means an initiation of war or aggression,” he wrote.

Despite the flurry of optimism over potential de-escalation, attacks were still continuing on Wednesday. An oil tanker was struck near Qatar, with a UK naval group saying the incident caused a fire that was eventually extinguished. There was no environmental damage reported.

--With assistance from Sarah Chen and John Deane.

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