Oil prices edge up as Trump hints at Iran deal, Strait of Hormuz crisis deepens
By Aboki Forex —
Oil prices inched higher on Thursday after a sharp drop the previous day, as United States President Donald Trump said the US is in the “final stages” with Iran. Brent crude traded near $106 per barrel, recovering from a 5.6 percent plunge on Wednesday. West Texas Intermediate was above $99.
Trump’s comments to reporters raised hopes that Washington and Tehran may soon reach a deal to restart energy flows through the critical Strait of Hormuz. The waterway has been virtually shut since the war escalated in late February.
Conflicting headlines about the status of talks have kept oil markets volatile this week. Prices are still more than 40 percent higher than when the conflict began. Traders have consistently priced in the possibility of a sudden de-escalation, including a deal that would reopen the strait and unlock millions of barrels stuck in the Persian Gulf.
But a peace deal with Iran may not bring immediate relief. “The physical markets are still in disarray,” said Joe DeLaura, global energy strategist at Rabobank. “It takes up to 55 days to get oil from the Persian Gulf to its destination, which means inventories will still be drawing during that period.”
Even if the Iran conflict ended immediately, Middle East oil flows would not fully recover until well into 2027, Abu Dhabi National Oil Co. Chief Executive Officer Sultan Al Jaber said on Wednesday. He described the Strait of Hormuz closure as the most severe supply disruption on record.
Global stockpiles of crude oil and products are being drawn down at a record pace this month, according to Goldman Sachs Group Inc. US crude inventories fell by about 7.9 million barrels last week, in line with earlier estimates. Exports from the US were below recent record levels as overseas buyers stock up on American oil to replace disrupted Middle East supply.
Some early signs of higher flows through the strait are also reducing the risk premium in crude prices. Three oil supertankers appeared to attempt to cross the waterway, the latest in a small uptick in traffic after a relative lull in recent days. Iran claimed 26 ships passed in the last 24 hours, though it has previously suggested far larger transit numbers than ship-tracking data shows.
Trump said on Wednesday “we’ll see what happens” with Iran, adding that a deal will be made or “we’re going to do some things that are a little bit nasty, but hopefully that won’t happen.” He has repeatedly threatened to restart strikes on Iran if it does not agree to his peace terms.
Iran is reviewing the US’s new draft in response to Tehran’s 14-point proposal and has not yet given a response, the semi-official Tasnim news agency reported, citing a source close to the country’s negotiating team. Earlier on Wednesday, Iran warned it would retaliate beyond the Middle East if the US or Israel attacks it again.