Oil Prices Rebound as Iran Peace Deal Uncertainty and Falling Inventories Raise Supply Concerns
Oil prices moved higher on Thursday, recovering part of the sharp losses recorded in the previous session as investors closely followed developments surrounding potential peace negotiations between the United States and Iran. At the same time, tighter global supplies and declining U.S. inventories supported crude markets.
Brent crude futures gained $1.27, or 1.21%, reaching $106.29 per barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.29, or 1.31%, to $99.55 per barrel.
Oil Market Recovers After Heavy Selloff
Both major oil benchmarks had fallen more than 5.6% on Wednesday, marking their lowest levels in over a week. The decline followed comments from President Donald Trump, who stated that discussions with Iran were approaching their final stage while also warning of additional military action if Tehran rejected a peace agreement.
Analysts at ING noted that oil traders remain highly reactive to headlines related to Iran, with markets placing significant expectations on signs of progress in U.S.-Iran negotiations.
However, analysts also warned that similar optimism in previous rounds of talks often ended in disappointment. ING forecasts Brent crude prices averaging around $104 per barrel during the current quarter.
Iran Tightens Control Over Strait of Hormuz
Geopolitical tensions remain elevated after Iran introduced new measures reinforcing its authority over the strategically vital Strait of Hormuz — one of the world’s most important shipping routes for oil and liquefied natural gas.
Before disruptions, the strait handled energy shipments equivalent to roughly 20% of global consumption.
Iran announced the creation of a new “Persian Gulf Strait Authority,” stating that a controlled maritime zone would operate within the Strait of Hormuz.
The waterway has remained heavily restricted following conflict involving the U.S. and Israel earlier this year. Although major fighting eased after an April ceasefire, Iran continues limiting maritime traffic while the United States maintains pressure along Iran’s coastline.
Supply Disruptions Increase Pressure on Global Inventories
Reduced energy exports from the Middle East have forced countries to rely increasingly on commercial reserves and strategic oil stockpiles, raising concerns over long-term inventory depletion.
According to the U.S. Energy Information Administration (EIA), the United States withdrew nearly 10 million barrels from its Strategic Petroleum Reserve last week, marking the largest drawdown ever recorded.
Additional EIA data showed a larger-than-expected decline in U.S. crude inventories, highlighting the growing impact of supply shortages.
Falling Oil Inventories Could Support Higher Prices
Mingyu Gao, chief researcher for energy and chemicals at China Futures, said shrinking inventories may prevent oil prices from remaining low for an extended period.
He added that restrictions around the Strait of Hormuz could push global refined fuel supplies and onshore crude inventories below their lowest seasonal levels seen over the past five years by late May and June.
Persistent supply constraints combined with geopolitical uncertainty continue to create upward pressure on energy markets, keeping traders focused on developments in the Middle East and global stockpile levels.
