Oil Prices Rise Amid Optimism Over US-Iran Diplomatic Progress

Oil Prices Edged Higher Amid Hopes for US-Iran Deal

Oil prices inched higher on Thursday after plummeting on Wednesday, as President Donald Trump's comments on the status of negotiations between Washington and Tehran sparked hopes for a deal that would see a near-term restart of energy flows through the critical Strait of Hormuz.

West Texas Intermediate traded near $99 a barrel, after sliding more than 5% in the prior session, while Brent closed near $105. This comes after conflicting headlines about the status of negotiations have buffeted oil this week, with prices still more than 40% higher than when the war started at the end of February.

The physical markets are still in disarray, with it taking up to 55 days to get oil from the Persian Gulf to its destination, which means inventories will still be drawing during that period. This has led to a decline in US crude stockpiles, which slid by about 7.9 million barrels last week, broadly in-line with earlier estimates from a widely followed industry group.

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Exports were shy of recent record-high levels, as overseas buyers stock up on American oil to offset disruptions to Middle East supply. Some nascent signs of higher flows through the strait are also siphoning risk premium out of 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 indicates. 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 doesn't agree to his peace terms. Iran is reviewing the US's new draft in response to Tehran's 14-point proposal and is yet to give a response, the semi-official Tasnim news agency reported, citing a source close to the country's negotiating team. Earlier in the day, Iran warned it would retaliate beyond the Middle East if the US or Israel attacks it again.

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