Brent Hits 5-week High

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.

Brent crude futures fell for a second straight session to around $107 per barrel on Wednesday, as traders grew cautiously optimistic that the US and Iran could reach an agreement, despite conflicting signals from both sides. US President Trump said the conflict with Iran could end “very quickly,” while also warning that Washington could resume strikes if negotiations fail. Trump had recently called off a planned US attack scheduled for Tuesday as part of efforts to advance a potential deal. Iran threatened to extend the conflict ‘beyond the region’ if the US and Israel resume attacks. Meanwhile, disruptions in the Strait of Hormuz continue to support oil prices and although some vessels have resumed transit, the key shipping route remains largely restricted. Reports indicated that three supertankers carrying crude departed the Strait on Wednesday. In the US, crude oil inventories fell for a 4th straight week. Oil prices remain roughly 50% above levels seen before the conflict began.