Oil Prices Stabilize After Sharp Selloff
Brent Crude and West Texas Intermediate prices traded mostly unchanged on Thursday after suffering steep losses in the previous session, as investors continued monitoring developments surrounding a possible U.S.-Iran peace agreement and fresh U.S. inventory data.
Brent crude futures for July delivery rose 0.3% to $101.55 per barrel, while WTI crude futures also gained 0.3% to $95.37 per barrel during early trading hours.
Both oil benchmarks had plunged more than 7% on Wednesday after reports suggested Washington and Tehran were moving closer toward a diplomatic agreement that could ease tensions in the Middle East.
US and Iran Move Closer to Potential Agreement
According to reports from Axios, the White House is nearing a one-page memorandum of understanding with Iran aimed at ending the ongoing conflict.
The report stated that U.S. officials expected a response from Tehran within 48 hours and described the negotiations as the closest both sides have come to reaching an agreement since the war began.
Meanwhile, CNN reported that Iran is expected to deliver its official response to mediators by Thursday.
An Iranian Foreign Ministry spokesperson, quoted by Iran’s ISNA news agency, confirmed that Tehran would communicate its response regarding the U.S. proposal.
Strait of Hormuz Remains Key Market Focus
Global energy markets remain highly sensitive to developments involving the Strait of Hormuz, one of the world’s most important oil shipping routes.
Roughly one-fifth of global oil trade passes through the strategic waterway.
Analysts at ING said that any agreement restoring normal traffic through the Strait of Hormuz would likely reduce the geopolitical risk premium currently built into oil prices.
However, they warned that any delays or setbacks in negotiations could quickly trigger another surge in crude oil and natural gas prices.
Earlier this week, the United States reportedly paused efforts to restore commercial shipping traffic through the Strait of Hormuz after Iran responded with military action.
US Oil Inventories Decline Less Than Expected
Limiting further gains in oil prices were fresh inventory figures released by the U.S. Energy Information Administration.
The EIA reported that U.S. commercial crude oil inventories, excluding the Strategic Petroleum Reserve, declined by 2.3 million barrels during the week ending May 1.
The decline brought total stockpiles down to 457.2 million barrels, although analysts had expected a larger drawdown of around 3.4 million barrels.
Gasoline and Distillate Supplies Also Fall
The report also showed that gasoline inventories dropped by 2.5 million barrels, while distillate fuel stockpiles, including diesel and heating oil, declined by 1.3 million barrels.
In addition, the EIA data highlighted strong petroleum export demand, signaling continued global reliance on U.S. energy supplies amid ongoing disruptions linked to Middle East tensions.
