Oil prices moved higher on Thursday as markets reacted to mixed signals about possible de-escalation in the Middle East, while Iran considered a U.S. proposal intended to bring the war to an end.
By 05:33 ET (09:33 GMT), Brent crude futures for May delivery, the global benchmark, had gained 4.0% to $106.34 per barrel. U.S. West Texas Intermediate crude futures also advanced 3.7% to $93.66 per barrel.
Investors were assessing tentative diplomatic developments from Tehran, where authorities are reportedly examining a U.S.-supported plan designed to stop the fighting.
However, Iran has publicly rejected the idea that it is engaged in direct negotiations with Washington and has signaled that major disagreements remain unresolved. The uncertainty surrounding the situation has kept traders cautious.
Oil markets have experienced sharp swings in recent weeks as the conflict disrupted energy flows from the Persian Gulf, a key region for global crude supply. Brent crude surged to nearly $120 per barrel earlier this month amid concerns about possible supply interruptions.
The Strait of Hormuz — a crucial shipping corridor through which about one-fifth of the world’s oil supply moves — has effectively been closed to tanker traffic due to the threat of Iranian attacks on vessels.
On Wednesday, oil prices had declined after reports suggested negotiations between the United States and Iran could take place to end the conflict, which has now lasted nearly a month.
Market participants are also watching conflicting messages coming from Washington. Officials have warned that tougher measures could be taken if Iran does not cooperate, while U.S. President Donald Trump has reportedly told advisers that he would prefer the war to end quickly.
Despite recent volatility, crude prices remain significantly higher than levels seen before fighting erupted in late February. The rise has fueled concerns that global inflationary pressures could increase, potentially forcing central banks to consider raising interest rates again.
“A more prolonged disruption to energy supplies would deliver a much larger hit to global activity similar” to that seen after Russia’s invasion of Ukraine in 2022 and “prompt a broader monetary tightening cycle,” analysts at Capital Economics wrote in a note to clients.