Oil prices edged higher in early Asian trade on Thursday, rebounding from the previous session’s steep selloff, as investors reassessed the chances of a near-term U.S.-Iran peace agreement and weighed continuing disruptions to Middle East energy flows.
Brent crude futures rose 0.66%, to $101.94 a barrel in early trade, while U.S. West Texas Intermediate crude gained 0.74% to trade at $95.78 a barrel.
Both benchmarks tumbled more than 7% on Wednesday after reports suggested Washington and Tehran were moving closer to a framework agreement that could formally end the war and eventually reopen the Strait of Hormuz.
The selloff eased late in the session after President Trump said it was still “too soon” for direct talks with Tehran, while Iranian officials signaled major sticking points remained unresolved – most notably the nuclear issue.
Iran said on Wednesday it was reviewing a U.S. proposal, which has been described by sources as a one-page memorandum aimed at ending the conflict.
Axios reported that Washington expects an Iranian response within the next 48 hours, citing sources who said the two sides were closer to an agreement than at any point since the war began.
Traffic through the Strait of Hormuz remains heavily constrained despite diplomatic progress, with traders and shipping companies awaiting evidence that transit conditions are genuinely improving.
Meanwhile, oil prices continue to find support from tightness in physical crude markets, with the EIA confirming another decline in U.S. crude and fuel inventories.
U.S. crude stockpiles fell by 2.3 million barrels to 457.2 million barrels last week. Gasoline and distillate inventories also posted draws, while U.S. crude product exports climbed to a record high.
Oil markets will remain sensitive to any announcements from Washington or Tehran, with plenty of upside risk if a diplomatic breakthrough doesn’t come in the next 48 hours.
By Josh Owens for Oilprice.com
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