Oil prices edged higher on Wednesday as investors tracked progress in US-Iran negotiations while monitoring the recovery of oil shipments through the Strait of Hormuz, easing concerns over prolonged supply disruptions.
Brent traded above $73 a barrel, while West Texas Intermediate (WTI) hovered near $70, after crude posted its steepest quarterly decline since the pandemic. The recent sell-off has been driven by expectations that oil flows through the Strait of Hormuz — a route that carries about one-fifth of global crude and liquefied natural gas shipments — will continue to normalise.
Sentiment improved after senior US officials said indirect discussions between Washington and Tehran in Doha had been constructive. US negotiators Jared Kushner and Steve Witkoff held talks in Qatar, with technical discussions between the two sides continuing as efforts to secure a more durable ceasefire gather pace.
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While recent attacks near the Strait of Hormuz briefly disrupted tanker movements, shipping activity has begun recovering after the exchange of strikes between the US and Iran over the weekend. The gradual return of vessel traffic has eased immediate concerns over supply bottlenecks in one of the world's most critical energy corridors.
Iran has reiterated its intention to play a greater role in overseeing maritime traffic through the strait, while broader issues — including its nuclear programme and regional security concerns — remain unresolved despite the current 60-day ceasefire framework.
Adding to the bearish outlook, Morgan Stanley has warned that the global oil market could face a supply glut sooner than expected. The brokerage recently lowered its Brent price forecasts for the second time in two weeks, citing the faster-than-anticipated reopening of the Strait of Hormuz, resilient US crude production and weak demand from China.
Supply is also increasing from other producers. Iran said it has exported more than 40 million barrels of crude since the US lifted its naval blockade, while Russian exports have climbed to record levels, contributing to a growing build-up of crude inventories at sea.
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