A cargo ship in the Gulf near the Strait of Hormuz in United Arab Emirates on March 11. The Strait of Hormuz typically carries about 20 per cent of the world’s oil and liquefied natural gas flows.Stringer/Reuters
Oil prices rose on Thursday on skepticism that forthcoming peace talks between the U.S. and Iran would be able to resolve disruptions to Middle Eastern energy supplies caused by the ongoing war.
Brent crude futures climbed US$4.46, or 4.7 per cent, to settle at US$99.39 a barrel. U.S. West Texas Intermediate crude futures gained US$3.40, or 3.7 per cent, to settle at US$94.69 a barrel.
The U.S.-Israeli war with Iran stands as the largest-ever disruption of global oil and gas supplies due to Iran’s interruption of traffic through the Strait of Hormuz, which typically carries about 20 per cent of the world’s oil and liquefied natural gas flows. Each day that passes with maritime traffic still effectively shut means oil users worldwide are running down supply – tightening markets.
“We remain skeptical of any immediate solving of this war,” PVM oil market analyst John Evans said. “Pick any headline and there is always a counter.”
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U.S. and Iranian negotiators have scaled back their expectations for a comprehensive peace deal and are instead seeking a temporary memorandum to prevent a return to conflict, two Iranian sources told Reuters on Thursday.
By contrast, U.S. President Donald Trump later said the U.S. is very close to a deal with Iran, an assertion he has previously made. Oil benchmarks barely reacted to his remarks.
Oil markets also did not react to Trump’s announcement of a 10-day ceasefire between Israel and Lebanon in their related conflict, starting Thursday.
The supply disruptions are straining global oil inventories, particularly for jet fuel in parts of Asia and Africa.
Analysts from ING estimate that roughly 13 million barrels per day of oil flow has been disrupted by the closure of the Strait.
U.S. crude oil inventories fell by 913,000 barrels last week, compared with analysts’ expectations for an increase of 154,000 barrels, government data showed on Wednesday. U.S. gasoline and distillate fuel inventories also fell last week as countries seeking to replace Middle Eastern supplies drove U.S. exports higher.
“As of now, there are no bombs falling, but the amount of ships making it through the Strait is no better than it was before the U.S. Blockade, which just adds to global draw on stocks that finally showed up in the U.S. this week,” Scott Shelton, analyst at TP ICAP, said.
U.S. and Iranian officials were considering returning to Pakistan for further talks as early as the coming weekend.
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 to prevent renewed conflict after a two-week ceasefire started on April 8.
With the U.S. blockade on Iranian ports announced after the collapse of peace talks over the weekend, the disruption could increase, although some U.S.-sanctioned tankers have made it through.
U.S. Treasury Secretary Scott Bessent said that Washington will not be renewing sanction waivers for some Iranian and Russian oil.