Oil prices traded close to unchanged on Wednesday as investors weighed hopes for a Middle East peace agreement against reports of a new Houthi attack on a Saudi oil tanker.
Earlier gains faded as traders remained cautious about the reliability of diplomatic progress and the continuing threat to regional shipping.
Brent and WTI Move in Opposite Directions
At 09:40 ET, or 13:40 GMT, Brent crude futures were up 0.3% at $79.62 per barrel.
U.S. West Texas Intermediate crude futures fell 0.4% to $75.52 per barrel.
Both oil benchmarks had dropped by more than 5% during the previous session, extending the sharp losses recorded on Monday.
Houthis Claim Attack on Saudi Oil Tanker
Yemen’s Iran-backed Houthi movement claimed responsibility for a missile attack on a Saudi oil tanker near the port city of Yanbu.
Yanbu is an important centre for Saudi Arabia’s crude oil production and exports.
However, Saudi authorities had not immediately confirmed the reported attack.
The incident renewed concerns about the safety of tankers operating across the Red Sea and nearby shipping routes.
US and Iran Reportedly Near Interim Agreement
The reported attack came as the United States, Iran, and Oman appeared to be moving closer to an interim agreement concerning the Strait of Hormuz.
Axios reported that Washington was hoping to announce the proposed deal on Wednesday.
The agreement would aim to reopen the vital waterway and reduce tensions between the United States and Iran.
Iranian media, however, suggested that progress could be delayed while U.S. threats against Tehran continue.
Trump Says Hormuz Could Reopen Soon
U.S. President Donald Trump said the White House had held productive talks with Iran during lengthy negotiations on Tuesday.
Trump told Fox News that the Strait of Hormuz could reopen soon.
However, he also warned that Iran would face severe consequences if it withdrew from a possible agreement.
The mixed message reinforced uncertainty over whether the diplomatic process can produce a lasting settlement.
Qatar Helps Mediate Peace Efforts
Qatar said mediators had prepared an interim proposal designed to reduce differences between Washington and Tehran.
Trump also discussed efforts to ease tensions with Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani during a telephone call.
The proposal focuses on restoring commercial navigation through the Strait of Hormuz and improving regional stability.
Why the Strait of Hormuz Matters
Before the conflict began in late February, approximately one-fifth of the world’s oil and liquefied natural gas passed through the Strait of Hormuz.
Any disruption to the waterway can affect global energy supplies, shipping costs, and oil prices.
The Bab el-Mandeb Strait is another important route because it connects the Red Sea with the Gulf of Aden.
Ship-tracking data showed that traffic through both waterways remained broadly stable on Tuesday compared with the previous day.
Nevertheless, shipping volumes were still significantly below pre-conflict levels.
Tanker Security Risks Remain High
Risks to commercial vessels remain elevated across the region.
Another ship reportedly came under attack near the Strait of Hormuz on Tuesday, adding to concerns about the safety of maritime trade.
Even if diplomatic negotiations continue, further attacks could quickly undermine confidence and place renewed upward pressure on oil prices.
Traders Remain Cautious About Peace Talks
Analysts noted that investors have become familiar with repeated cycles of military threats followed by temporary de-escalation.
Trump recently cancelled plans for additional strikes against Iran.
That decision followed several days of air attacks between the two sides, which weakened an earlier ceasefire framework agreed in June.
Because previous diplomatic hopes have faded quickly, traders are likely to wait for a formal agreement before pricing in a lasting reduction in geopolitical risk.
US Crude Inventories Unexpectedly Increase
Oil prices also faced pressure from signs of rising U.S. crude inventories.
The American Petroleum Institute reported that domestic stockpiles increased by 2.69 million barrels during the week ending July 31.
Analysts had expected inventories to decline by approximately 2 million barrels.
A surprise increase in stockpiles can indicate that supply is exceeding demand, which is generally negative for crude oil prices.
EIA Inventory Report Moves Into Focus
The market is now awaiting official inventory data from the U.S. Energy Information Administration.
The EIA report will help determine whether the API figures accurately reflect the latest supply and demand conditions.
Another inventory increase could place additional pressure on oil prices.
However, a decline in official stockpiles could provide support, particularly if security risks in the Middle East remain elevated.
Oil Outlook Remains Uncertain
Oil markets are currently being pulled in opposite directions.
Middle East peace hopes and the possible reopening of the Strait of Hormuz are weighing on prices. Meanwhile, attacks on commercial vessels continue to support a geopolitical risk premium.
The next major moves will likely depend on whether a formal agreement is announced, whether regional shipping becomes safer, and what the latest EIA inventory figures reveal about U.S. demand.
