Oil prices traded near the $100-per-barrel mark on Wednesday as investors monitored signs of diplomatic progress between the United States and Iran.
Markets also reacted to improving expectations for oil flows from the Middle East, particularly through the Strait of Hormuz.
By 08:06 ET, Brent crude futures were up 1.1% at $100.30 per barrel. U.S. West Texas Intermediate crude futures edged 0.1% higher to $90.64 per barrel.
Brent Crude Returns Above $100
Both major oil benchmarks fell by more than 1% in the previous session.
Brent crude settled below $100 per barrel for the first time since September 8.
Despite the recent pullback, oil prices remain more than 60% higher than at the start of the year, according to analysts at ING.
The sharp annual increase reflects persistent geopolitical risks and concerns over global energy supplies.
U.S.-Iran Talks Raise Hopes for De-Escalation
Attention remains focused on negotiations between Washington and Tehran.
U.S. President Donald Trump said on Tuesday that his administration had held a productive three-hour meeting with Iranian representatives in New York.
Although Trump also used strong language toward Iran, his comments raised hopes that negotiations could eventually reduce tensions and improve oil flows across the Gulf region.
Any meaningful diplomatic progress could have a major impact on crude oil prices.
Strait of Hormuz Remains Critical for Oil Markets
Iran has reportedly indicated that it could reopen the Strait of Hormuz within seven days if the United States reduces military pressure and ends its blockade of Iranian ports.
However, Tehran has not confirmed that a final agreement has been reached.
The Strait of Hormuz remains one of the most important shipping routes in global energy markets.
Before the conflict, roughly one-fifth of global oil and liquefied natural gas supplies passed through the waterway.
Recent tanker activity suggests that energy flows through the region have started to improve. However, risks to commercial shipping remain elevated.
Saudi Arabia Restarts Key East-West Pipeline
Saudi Arabia has also restarted operations at its East-West oil pipeline.
The route allows Saudi crude to reach the Red Sea port of Yanbu without passing through the Strait of Hormuz.
The pipeline had been closed following a drone attack earlier this month.
Its total capacity is around 7 million barrels per day.
However, damage to several pumping stations means a full return to capacity could take between six and eight weeks.
The restart nevertheless gives Saudi Arabia an important alternative route for crude exports while uncertainty around Hormuz continues.
U.S. Crude Inventories Rise Unexpectedly
Fresh inventory data added some downward pressure to oil prices.
U.S. crude inventories increased by 1.7 million barrels last week.
That was significantly weaker than market expectations, which had pointed to a decline of around 578,000 barrels.
Rising inventories can signal softer demand or stronger supply, both of which may weigh on crude prices.
Oil Prices Balance Diplomacy and Supply Risks
Oil markets are currently balancing several competing factors.
Signs of progress in U.S.-Iran talks and improving Middle Eastern supply routes are helping reduce fears of severe supply disruptions.
At the same time, geopolitical tensions remain high and oil flows through the Strait of Hormuz are still vulnerable.
Higher U.S. crude inventories are also adding pressure to the market.
For now, Brent crude remains close to the key $100 level as traders wait for further developments in Iran talks and regional energy flows.
