Global crude prices showed signs of stabilising after a sharp selloff, as renewed diplomatic efforts between the US and Iran offered cautious optimism to markets rattled by supply disruptions. Brent crude hovered above $94 a barrel after tumbling nearly 5% in the previous session, while US benchmark WTI traded close to $90.
The recovery comes as both sides look to resume negotiations within days, with the aim of extending a ceasefire that is due to lapse next week. While multiple locations are being considered for the next round, the urgency of talks reflects growing concerns over prolonged supply disruptions.
Despite diplomatic progress, tensions remain high on the ground. The US continues to enforce a naval blockade in the Strait of Hormuz, one of the world's most critical oil transit chokepoints, in a bid to restrict Iranian exports. Tehran, meanwhile, is reportedly weighing a temporary halt to shipments through the route, a move that could avoid direct confrontation but further strain global supply. Since the conflict began, shipping activity through the strait has been severely curtailed, intensifying fears of a prolonged supply crunch.
ALSO READ: Oil Cools As US, Iran Weigh More Talks With Blockade In Place; Brent Falls Over 3%
Demand Pressures Build Amid Price Surge
The conflict has delivered a significant shock to global oil markets, pushing up crude and fuel prices and dampening consumption. The International Energy Agency has already warned of weaker demand growth this year as elevated prices weigh on consumers.
Adding to bearish pressure, US crude inventories rose by 6.1 million barrels last week, according to the American Petroleum Institute. If confirmed by official data, this would mark the eighth consecutive weekly increase, signalling ample supply in the world's largest oil consumer.
Market participants are now closely tracking geopolitical developments. Analysts at ANZ Group suggest that any easing of tensions could trigger a phased recovery in Middle Eastern supply, potentially restoring 2–3 million barrels per day within a month. However, policy moves from Washington could complicate the outlook. A temporary waiver allowing limited purchases of Iranian oil is set to expire this weekend, potentially tightening supply further.
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