Slight Rise in Oil Prices Despite Hopes for an Agreement Between Washington and Tehran

SadaNews - Oil prices have risen slightly after a sharp decline on Wednesday, as President Donald Trump stated that the United States is in the "final stages" of negotiations with Iran.

Brent crude traded above $105 per barrel after plummeting 5.6% on Wednesday, while West Texas Intermediate crude traded near $99.

Trump's comments to reporters sparked hopes for an agreement between Washington and Tehran, which could lead to a near-resumption of energy flows through the vital Strait of Hormuz.

Conflicting headlines regarding the state of negotiations have caused volatility in oil prices this week, with prices still over 40% higher compared to their levels at the onset of the war in late February.

Nevertheless, traders have consistently priced in the possibility of a sudden de-escalation, including an agreement that would see Iran reopen the main shipping corridor, freeing millions of barrels stuck in the waters of the Arabian Gulf.

Actual Oil Markets Still Disturbed

Although a peace agreement with Iran could push prices down, "actual markets are still in disarray," according to Joe DeLaura, a global energy strategist at Rabobank.

He added, "It takes up to 55 days for oil to travel from the Arabian Gulf to its destination, meaning inventories will continue to decline during that period."

Even if the conflict with Iran were to end immediately, Middle East oil flows would not fully recover until mid-2027, according to Sultan al-Jaber, CEO of Abu Dhabi National Oil Company (ADNOC) on Wednesday. He stated that the closure of the Strait of Hormuz was the most severe disruption to supplies ever.

U.S. crude inventories fell by about 7.9 million barrels last week, generally in line with earlier estimates from a widely-followed industry group. Exports came in below their recent record levels, as foreign buyers have been stockpiling U.S. oil to offset disruptions in Middle East supplies.

Preliminary Indicators of Broader Movement Through Hormuz

Some preliminary indicators of increasing flows through the strait are reducing part of the risk premium in crude prices. Three super tankers appeared to be attempting to cross the waterway, in the latest slight increase in traffic following a relative calm in recent days.

Iran claimed that 26 vessels crossed in the past 24 hours, although it previously indicated much larger crossing numbers than the data tracking ships show.

On Wednesday, Trump stated, "We will see what happens" with Iran, adding that an agreement will be reached, or "we will do some tough things, but we hope that does not happen." He has repeatedly threatened to resume strikes on Iran if it does not agree to his terms for peace.

Iran is returning the new U.S. draft in response to Tehran's proposed 14-point plan, and has not yet provided a response, according to the semi-official Tasnim news agency, citing a source close to the country's negotiating team. Earlier that day, Iran warned that it would respond outside the Middle East if the United States or Israel attacked it again.