Crude Oil Trims Gains on US-Iran Deal Hopes

Crude oil traded near $95 a barrel on Thursday, trimming a surge that peaked at $97 amid signs that the US and Iran could be working to restore Persian Gulf exports. Reports suggested US and Iranian negotiators were exploring a deal to lift naval blockades on tankers crossing the Strait of Hormuz and ease US sanctions on Iran. Earlier, prices surged after Iran-allied Houthi militants in Yemen fired missiles at Saudi cities including Yanbu and Taif. Yanbu is a key oil export terminal on Saudi Arabia’s Red Sea coast. Saudi Arabia’s workaround for the Strait of Hormuz now carries war-risk insurance costs nearly as high as sending tankers through the strait. Only 10 commodity vessels transited Hormuz on Wednesday, below the 10-day moving average of 17. Meanwhile, the US Senate narrowly rejected a nonbinding measure demanding an end to the war with Iran.

Crude oil traded near $94 per barrel on Thursday, trimming a surge that peaked at $97 amid signs that the US and Iran could be working to re-establish exports from the Persian Gulf. Reports suggested that US and Iranian negotiators were exploring a deal that would lift naval blockades against tankers crossing the Strait of Hormuz and ease US sanctions on the Iranian economy. Strikes on commercial vessels earlier this month had brought oil exports out of GCC countries to a near standstill. The supply disruption was compounded by attacks on the East-West pipeline in Saudi Arabia, which had been diverting 7 million bpd of crude to Red Sea ports. The prolonged halt of tanker flows from the region forced major OPEC members to cut oil production, with Saudi output recently dropping to its lowest level since 1990. Lower stocks from China risked buying from the world's top importer, while the US Strategic Petroleum Reserve (SPR) stands at a near-record low.

Crude oil extended gains to over $96 a barrel on Thursday, as escalating tensions in the Middle East heightened concerns over regional energy supplies. Yemen’s Houthi group said it had attacked Saudi military sites in Jazan, while Saudi Arabia reported intercepting missiles launched toward the Red Sea port of Yanbu. Traders are closely monitoring Saudi crude shipments amid the renewed attacks. Oil prices had already been rising after Iran threatened to broaden the conflict, further reducing optimism over a potential agreement to reopen the strategically important Strait of Hormuz. A senior Iranian military official said Tehran could expand the conflict to the Indian Ocean if the US or Israel launches another attack, according to Iran’s Fars news agency. The comments weakened hopes for a diplomatic resolution to the nearly seven-month conflict. Tehran has also maintained that it will restrict freedom of navigation through Hormuz while US sanctions and a blockade remain in place.