LONDON: Oil prices rose on Thursday, reversing earlier declines as the market questioned whether peace talks between the United States and Iran would produce a deal to end the war that has caused unprecedented disruption to Middle East energy supplies.
Brent crude futures rose $1.65, or 1.7 per cent, to $96.58 a barrel at 0832 GMT. U.S. West Texas Intermediate crude futures climbed $1.45, or 1.6 per cent, to $92.74 a barrel. Both benchmarks settled little changed on Wednesday after trading in a wide range during the session.
“We remain sceptical of any immediate resolution to this war,” said PVM oil market analyst John Evans. “Pick any headline and there is always a counter.”
The U.S.-Israeli war on Iran has caused unprecedented disruption to global oil and gas flows. It has led to the halting of traffic through the Strait of Hormuz, which typically carries about 20 per cent of the world’s oil and liquefied natural gas flows.
POSSIBLE RESUMPTION OF TALKS
U.S. and Iranian officials were considering returning to Pakistan for further talks as early as this coming weekend. Pakistan’s army chief arrived in Tehran on Wednesday as a mediator.
A source briefed by Tehran told Reuters that Iran could consider allowing ships to sail freely through the Omani side of the Strait of Hormuz in the event of a deal aimed at preventing renewed conflict after a two-week ceasefire began on April 8.
In another sign of a potential easing of military action, Israel’s cabinet met on Wednesday to discuss a possible ceasefire in neighbouring Lebanon, a senior Israeli official said, more than six weeks into its war with Iran-backed Hezbollah.
Analysts at ING estimate that roughly 13 million barrels per day of oil flows have been disrupted by the closure of the Strait, after taking into account pipeline diversions and the trickle of tankers that have passed through the gateway.
With the U.S. blockade on Iranian ports announced after the collapse of peace talks over the weekend, the disruption could increase.
U.S. Treasury Secretary Scott Bessent said Washington would not renew sanction waivers for some Iranian and Russian oil.
Underscoring the tightness of global crude and oil product supplies, U.S. inventories of crude, gasoline and distillate fuels fell last week, the Energy Information Administration said on Wednesday, as countries seeking barrels to replace disrupted flows drove exports higher and caused imports to shrink. —Reuters
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