Oil prices were little changed on Thursday after suffering sharp losses earlier in the week.
Investors remained focused on negotiations that could restore shipping through the Strait of Hormuz, one of the world’s most important energy routes.
At 05:23 ET, or 09:23 GMT, Brent crude futures were nearly unchanged at $79.48 per barrel.
U.S. West Texas Intermediate crude slipped 0.1% to $75.12 per barrel.
Both oil benchmarks were still heading for weekly declines of more than 10%.
Iran and Oman Agree on Proposed Shipping Route
Iran said it had reached an agreement with Oman over the coordinates of a proposed shipping corridor through the Strait of Hormuz.
Before the Iran conflict began in late February, the waterway handled around one-fifth of global oil and liquefied natural gas shipments.
The announcement raised hopes that tanker traffic could gradually resume.
However, the agreement does not represent a complete reopening of the strait.
Key Details Remain Unresolved
Several important issues still need to be settled before normal shipping activity can return.
Negotiations are continuing over cargo fees, vessel inspections and wider security arrangements.
As a result, traders remain cautious about the likelihood of a quick and lasting resolution.
Uncertainty also remains over whether any final agreement can be fully implemented.
U.S.-Iran Talks Remain Uncertain
U.S. President Donald Trump said during a rally in Las Vegas that Washington was holding discussions with Tehran.
He added that he would wait to see how the negotiations developed.
However, Iran has publicly denied that direct peace talks with the United States are taking place.
The conflicting statements have added to uncertainty across energy markets.
Progress in Negotiations Could Restore Energy Flows
ING analysts said the direction of U.S.-Iran discussions had become the main factor for oil markets.
They noted that meaningful diplomatic progress would be necessary before disrupted energy shipments could realistically return to normal.
Expectations of increased tanker movements through the Strait of Hormuz have already reduced some concerns about supply shortages.
Those fears had helped push oil prices sharply higher in previous weeks.
Geopolitical Risk Has Not Disappeared
Despite recent optimism, analysts warned that the geopolitical risk premium remains present in oil prices.
Negotiations have experienced several setbacks, while doubts remain over the durability of any agreement.
A breakdown in talks could quickly renew concerns about shipping disruptions and energy shortages.
For that reason, oil markets remain highly sensitive to developments involving Iran, Oman and the United States.
U.S. Crude Inventories Rise Unexpectedly
Oil prices also faced pressure from an unexpected increase in U.S. crude inventories.
American crude stockpiles rose by approximately 2.5 million barrels last week.
Markets had expected inventories to decline by around 1.5 million barrels.
The increase suggested that near-term demand may be weaker than previously anticipated.
Gasoline and Distillate Supplies Tighten
While crude inventories increased, refined fuel supplies moved in the opposite direction.
U.S. gasoline stockpiles declined by 1.64 million barrels.
Distillate inventories, which include diesel and heating oil, fell by 3.47 million barrels.
These declines indicate tighter conditions in refined fuel markets, despite the broader weakness in crude prices.
Oil Market Outlook Depends on Hormuz Progress
The next major move in oil prices will likely depend on developments surrounding the Strait of Hormuz.
A broader agreement could support the return of tanker traffic and reduce fears of supply disruption.
However, unresolved security and inspection issues may continue to limit market confidence.
Traders will also monitor U.S. inventory data and signs of changing energy demand.
