Oil prices traded with little direction on Thursday, remaining close to their recent lows as markets balanced tentative progress on shipping through the Strait of Hormuz against ongoing geopolitical uncertainty and an unexpected increase in U.S. crude inventories.
At 02:55 ET (06:55 GMT), October Brent crude futures edged 0.3% higher to $79.71 per barrel, while West Texas Intermediate (WTI) futures gained 0.2% to $75.38 per barrel.
Although both benchmarks finished Wednesday’s session largely unchanged, they remain on course to record weekly declines of more than 10%.
Hormuz agreement improves sentiment but uncertainty remains
Investor confidence improved after Iran announced it had reached an agreement with Oman on the coordinates of a proposed shipping corridor through the Strait of Hormuz, a strategic route responsible for around one-fifth of global oil and liquefied natural gas trade.
Despite the announcement, traders remained cautious because the arrangement does not represent a full reopening of the waterway. Key issues, including cargo transit fees, vessel inspections and broader security measures, have yet to be resolved.
Speaking at a rally in Las Vegas on Wednesday, U.S. President Donald Trump said Washington was continuing discussions with Tehran and that he would “see what happens” as negotiations progress.
Iran, however, has publicly rejected reports that formal peace talks with the United States are underway.
ING analysts said, “The real hinge point now becomes the trajectory of US–Iran discussions, because meaningful progress there is essential before disrupted energy flows can realistically resume.”
Even so, the possibility of increased tanker traffic through the Strait of Hormuz has eased some of the concerns over prolonged supply disruptions that pushed oil prices sharply higher in recent weeks.
Analysts caution that a significant geopolitical risk premium remains in the market, reflecting repeated setbacks in negotiations and uncertainty over whether any future agreement can be fully implemented.
Rising US inventories cap oil’s recovery
Additional pressure came from the latest U.S. government inventory data, which showed crude oil stockpiles unexpectedly increased by approximately 2.5 million barrels last week, compared with expectations for a draw of around 1.5 million barrels. The figures pointed to softer short-term demand.
At the same time, refined fuel inventories continued to tighten. Gasoline stocks fell by 1.64 million barrels, while distillate inventories declined by 3.47 million barrels.
Beyond Hormuz, geopolitical risks remain elevated. Houthi attacks on commercial shipping in the Red Sea, continued disruption to maritime trade linked to the conflict between Russia and Ukraine, and interruptions affecting Kazakhstan’s primary oil export route all continue to pose risks to global energy supplies.