Oil Prices Rise as Iran Tensions Disrupt Supply
Oil prices continued to climb during Asian trading on Thursday, supported by a lack of progress in U.S.-Iran negotiations and ongoing disruptions to shipping activity in the Strait of Hormuz following recent vessel attacks.
Markets experienced sharp volatility earlier in the week before stabilizing higher on Wednesday, after U.S. President Donald Trump announced an indefinite extension of the ceasefire with Iran. However, potential peace talks in Pakistan failed to materialize, adding to uncertainty.
Brent crude futures rose 0.8% to $102.77 per barrel, while U.S. West Texas Intermediate (WTI) gained nearly 1% to $93.86 per barrel in early trading.
Ship Seizures and Blockade Fuel Supply Concerns
Oil prices surged earlier in the week after Iran seized two vessels in the Strait of Hormuz, significantly limiting shipping activity through the key waterway. At the same time, the United States maintained its naval blockade against Iran, further escalating tensions.
Despite the ceasefire extension, there has been little clarity on the future of diplomatic negotiations. Reports indicate that U.S. forces are continuing to monitor and intercept Iranian vessels in broader Asian waters.
Iran has made it clear that it will not engage in further talks unless the U.S. lifts its blockade, while Washington insists on the full reopening of the Strait of Hormuz before any agreement can be reached. This deadlock has left both sides at a standstill.
Strait of Hormuz Remains Critical
The Strait of Hormuz has become a central flashpoint in the conflict, with its partial closure disrupting roughly 20% of global oil supply. Economies across Asia and the Middle East are expected to face the greatest impact from prolonged supply constraints.
US Oil Exports Hit Record Levels
On the supply side, U.S. exports of crude oil and refined products surged to a record 12.88 million barrels per day over the past week. Strong demand from Europe and Asia—driven by Middle East supply disruptions—has supported this increase.
Gasoline Inventories Drop Sharply
According to the Energy Information Administration, U.S. gasoline inventories fell by nearly 4.6 million barrels last week, far exceeding expectations for a 1.5 million-barrel decline. Distillate stockpiles also dropped by 3.4 million barrels, compared to forecasts for a 2.5 million-barrel decrease.
This marks the tenth consecutive week of declining gasoline inventories, signaling sustained demand.
Crude Inventories Unexpectedly Rise
Despite strong fuel demand, total U.S. crude inventories increased by 1.9 million barrels, defying expectations for a draw of similar magnitude. This mixed inventory data highlights the complex dynamics currently shaping the oil market.
