Brent Surges

Brent crude futures stabilized around $105 a barrel on Thursday after falling nearly 6% over the previous two sessions, as traders cautiously weighed the possibility of a US–Iran deal that could reopen the Strait of Hormuz. However, sentiment remained fragile amid persistent uncertainty and mixed signals from both sides. Iran said it was reviewing the latest US proposal to end the conflict, after President Trump indicated he was willing to wait a few more days to “get the right answers” from Tehran. Meanwhile, Iran announced the creation of a “Persian Gulf Strait Authority,” stating that a “controlled maritime zone” would be enforced in the Strait of Hormuz. Oil prices remain elevated, nearly 50% above pre-war levels, supported by supply tightness and ongoing US inventory drawdowns. The country withdrew nearly 10 million barrels from its Strategic Petroleum Reserve last week, marking the largest release on record.

Brent crude futures rose above $106 per barrel on Thursday but held most of the nearly 6% drop from the previous session, as President Trump said the US was nearing the final phase of negotiations with Iran, fueling expectations that Middle Eastern oil supply could gradually return to the market. Tehran is currently evaluating Washington’s latest draft response to its 14-point proposal. A potential deal would likely lead to the removal of both countries’ naval blockades on commercial shipping through the Strait of Hormuz, where tanker traffic has been disrupted since March. Supply optimism was further supported by satellite data showing three supertankers passing through the strait. Still, analysts cautioned that global physical oil markets are likely to remain tight, given that shipments from the Persian Gulf can take nearly two months to reach end markets. Meanwhile, Abu Dhabi National Oil Co.'s CEO said full recovery in Middle Eastern oil flows is unlikely before late 2027.

Brent crude oil futures fell more than 5% to the $105 per barrel mark on Wednesday on fresh hope that supply from the Middle East could be gradually restored. US President Trump stated the US was on the final stages of talks with Iran over their conflict, backing early statements that Tehran could end the war quickly. An agreement would likely end each country's naval blockade of commercial vessels crossing the Strait of Hormuz, which has suspended tanker flows through the chokepoint since March. Optimism on supply was magnified by satellite data showing three supertankers crossing the Strait, potentially reflecting a looser grip on traffic. The Persian Gulf would typically supply economies with around 20 million barrels of oil per day, and the war triggered a surge in prices that topped at $116 per barrel in March. Consistently, crude oil inventories fell for the fourth straight week, and the US SPR was depleted by 10 million barrels, standing a 6.6% annual decline.