Oil prices held largely stable on Thursday, recovering from earlier losses as markets questioned whether ongoing negotiations between the United States and Iran would result in a breakthrough to end the conflict that has disrupted supply from a key Middle East production hub.
Brent crude futures slipped 26 cents to $94.67 per barrel by 06:11 GMT, while U.S. West Texas Intermediate crude rose 14 cents to $91.43 per barrel. Both benchmarks showed little overall movement in the previous session, despite trading within a broad range.
The conflict involving the U.S., Israel, and Iran has triggered one of the most significant disruptions to global oil and gas supply, largely due to Iran restricting traffic through the Strait of Hormuz, a vital route that normally carries about 20% of global oil and liquefied natural gas shipments.
“While there are hopes for de-escalation, many investors remain sceptical, given that U.S.-Iran talks have repeatedly broken down even after appearing to make progress,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“Until a peace deal is reached and free navigation through the strait is restored, WTI prices are expected to continue fluctuating between $80 and $100,” he added.
According to analysts at ING, around 13 million barrels per day of oil supply have been affected by the disruption in the strait, even after accounting for rerouted pipelines and limited tanker traffic that has managed to pass through. They warned that the situation could worsen following the U.S. decision to impose a blockade on Iranian ports after talks collapsed over the weekend.
“The physical market is becoming tighter every day that passes without a restart of oil flows through the Strait of Hormuz,” the ING analysts said.
A source familiar with discussions in Tehran told Reuters that Iran may consider allowing vessels to transit via the Omani side of the Strait of Hormuz if an agreement is reached to avoid renewed hostilities after the two-week ceasefire that began on April 8.
Officials from the U.S. and Iran are reportedly considering returning to Pakistan for further negotiations as soon as the coming weekend. Pakistan’s army chief arrived in Tehran on Wednesday in a mediation effort aimed at preventing a resumption of the conflict.
U.S. Treasury Secretary Scott Bessent said on Wednesday that Washington would not extend waivers that previously allowed certain purchases of Iranian and Russian oil without triggering sanctions.
Highlighting the tight supply conditions, U.S. government data showed declines in inventories of crude oil, gasoline, and distillates last week, as lower imports and increased exports reflected global efforts to offset disrupted supply flows.