US President Donald Trump said Washington could resume talks with Iran this week after negotiations ended without agreement.
Oil prices were largely unchanged on Wednesday as investors assessed the likelihood of renewed US-Iran negotiations and ongoing supply disruptions linked to the closure of the Strait of Hormuz
Brent crude rose 43 cents, or 0.5%, to $95.22 per barrel, recovering slightly after a sharp 4.6% drop in the previous session. Meanwhile, US West Texas Intermediate crude edged down 17 cents, or 0.2%, to $91.11, following a steeper 7.9% decline earlier.
The conflict in the Middle East has significantly restricted movement through the Strait of Hormuz, a critical passage for global oil shipments, particularly to markets in Asia and Europe. Despite a temporary ceasefire, traffic through the waterway remains far below normal levels, with only a fraction of the usual daily crossings recorded.
Trump indicated that diplomatic efforts to end the conflict could resume soon, although the US has simultaneously enforced a naval blockade on Iranian exports, effectively halting maritime trade from the country.
Analysts say market movements are increasingly driven by developments in diplomacy rather than military activity. According to Priyanka Sachdeva of Phillip Nova, signs of renewed negotiations have triggered price declines, suggesting traders are unwinding the geopolitical risk premium previously built into oil prices.
With supply from the Gulf constrained, refiners are turning to alternative sources, driving up premiums for crude from regions such as the US Gulf Coast and the North Sea. Notably, a shipment of WTI Midland crude bound for Rotterdam traded at a record premium above European benchmarks.
Tensions remain high, with reports that a US naval vessel intercepted two oil tankers attempting to depart Iran. Analysts warn that even if a peace deal is reached, Iran may continue to restrict oil flows for strategic leverage.
Further tightening of supply could occur as the US prepares to let key sanctions waivers on Iranian and Russian oil expire, potentially limiting additional barrels from reaching global markets.
Investors are also awaiting official US inventory data, expected later in the day, which could provide further direction for prices. Early estimates suggest a modest increase in crude stockpiles, marking a third consecutive weekly rise.
Goodness Anunobi
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