Oil prices edged higher on Thursday after suffering their steepest one-day decline in weeks, as investors weighed the possibility of a breakthrough in negotiations between the US and Iran that could reopen the Strait of Hormuz and restore disrupted crude supplies. Brent crude traded above $105 a barrel, recovering modestly after tumbling 5.6% in the previous session. US benchmark West Texas Intermediate hovered near $99 a barrel.
The rebound came after US President Donald Trump said Washington was in the “final stages” of talks with Tehran, raising hopes that a deal could be reached to end one of the most severe oil supply disruptions in modern history.
Despite the recent selloff, oil remains more than 40% higher than it was before the conflict began in late February. Traders have spent much of the past few months pricing in the risk that the closure of the Strait of Hormuz — a passage that normally carries about a fifth of the world's oil — could persist well into next year.
At the same time, the market has repeatedly flirted with the opposite scenario: a sudden diplomatic breakthrough that could release millions of barrels currently stranded in the Persian Gulf and sharply reduce the geopolitical risk premium embedded in prices.
Abu Dhabi National Oil Company Chief Executive Officer Sultan Al Jaber told Bloomberg that even if the conflict ended immediately, Middle Eastern oil flows would not fully normalise until well into 2027.
US inventory data underscored the current tightness. Government figures showed domestic crude stockpiles fell by about 7.9 million barrels last week, while exports remained elevated as overseas buyers continued to tap American barrels to compensate for lost Middle Eastern supply.
There are tentative indications that shipping activity through the Strait of Hormuz may be picking up. Several supertankers were seen attempting to transit the waterway, and Iranian authorities claimed 26 vessels crossed over the past 24 hours. Those signs helped strip some risk premium from crude, although market participants remain cautious given the highly fluid nature of negotiations.
Trump struck a mixed tone, telling reporters that a deal would either be reached or the US would do “some things that are a little bit nasty.”
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