Oil prices advanced on Wednesday, recovering from two-month lows after an Iranian security official said Tehran would not permit enriched nuclear material to leave the country, adding uncertainty to prospects for negotiations aimed at ending the conflict involving Iran, the United States and Israel.
At 09:34 GMT, Brent crude futures rose $1.28, or 1.4%, to $92.77 per barrel, while US West Texas Intermediate (WTI) crude gained $0.76, or 0.9%, to $86.80 per barrel.
The increase followed a volatile previous session, when oil prices initially declined by more than $3 per barrel after US officials indicated that further military strikes against Iran might not be necessary.
Prices subsequently recovered part of those losses after an Iranian security official stated that negotiations between the two countries were not underway.
Iran’s Nuclear Position Adds Uncertainty to Diplomatic Outlook
Iran’s security leadership said the country would not allow any enriched nuclear material to be transferred abroad.
The statement followed Washington’s position that nuclear issues must form part of initial negotiations with Tehran concerning an end to the US-Israeli conflict with Iran.
The disagreement added uncertainty to the possibility of a near-term diplomatic agreement, with traders assessing the implications for regional security and energy exports.
Giovanni Staunovo, an analyst at UBS, said: “Oil prices are being supported by fading hopes of an imminent de-escalation.”
The possibility of continued military activity in the region remains relevant to oil markets because of the importance of Middle Eastern production and maritime export routes.
Strait of Hormuz Shipping Attacks Remain a Supply Concern
Security conditions in the Strait of Hormuz continued to attract attention following a series of attacks on commercial vessels.
According to figures from the Washington Institute for Near East Policy, 37 ships were attacked during October, the highest monthly total since the conflict began.
The waterway is a major transit route for international crude oil shipments, and disruptions can affect transportation schedules, shipping costs and the availability of supplies.
June Goh, senior analyst at Sparta Commodities, said: “There has been an increase of vessel attacks in the Gulf shipping lanes amidst uncertainty of the diplomacy talks.”
Goh also identified Iran’s willingness to engage with US demands as a significant factor in determining the prospects for a diplomatic agreement.
The continued security concerns have contributed to uncertainty surrounding the movement of oil tankers through the region.
Tanker Incidents and Naval Mines Complicate Shipping Outlook
The United Kingdom Maritime Trade Operations agency reported on Tuesday that a tanker had been struck northeast of Lima, Oman.
Separately, Iran’s Revolutionary Guards Navy said two tankers had caught fire after encountering naval mines while travelling along what it described as an “unauthorized route” through the Strait of Hormuz.
The incidents raised additional questions about the conditions required for commercial shipping to resume normal operations.
In a November 10 research note, LSEG Oil Research stated: “Even in the event a deal is struck, an increase in flows through the waterway would still depend on mine clearance, insurance costs and whether or not shipowners would even be willing to take the risk.”
The assessment indicates that an eventual diplomatic agreement would not necessarily result in an immediate recovery in tanker traffic.
Mine clearance, maritime insurance costs and shipowners’ willingness to operate in the region could continue to influence the volume of energy shipments.
US Crude Inventories Reportedly Increase by 9 Million Barrels
Oil traders were also assessing preliminary US inventory figures that indicated a substantial increase in domestic crude stocks.
Market sources citing data from the American Petroleum Institute reported that US crude inventories rose by approximately 9 million barrels during the latest reporting week.
The figures suggested an increase in available crude supplies, although the official inventory report was scheduled for release later on Wednesday.
Government data was expected to provide further information about US crude stock levels and domestic market conditions.
Russian Oil Infrastructure Faces Further Disruptions
Developments affecting Russian energy infrastructure also remained relevant to global oil supply expectations.
A regional governor reported that a drone attack caused a fire in the port area of Ust-Luga on Russia’s Baltic coast, injuring three workers.
Separately, industry sources indicated that Russian oil refining capacity had been reduced by approximately 30% since late October following renewed Ukrainian drone attacks.
The reported reduction in refining capacity could affect Russian petroleum processing and the availability of refined products.
The developments occurred as Russian and Ukrainian officials met in Abu Dhabi on Tuesday for their first peace negotiations since February.
The discussions formed part of a renewed US diplomatic initiative aimed at ending the conflict.
Oil Markets Assess Geopolitical Risks and Inventory Data
Wednesday’s increase in crude prices reflected renewed attention to diplomatic developments involving Iran and the security of shipping routes in the Persian Gulf.
Although preliminary US inventory figures pointed to higher crude stocks, concerns about maritime transportation and regional energy infrastructure remained important factors for traders.
The outlook for oil prices continues to depend on developments in negotiations involving Iran, security conditions in the Strait of Hormuz, US inventory trends and disruptions affecting Russian energy facilities.