Oil prices edged lower on Thursday as traders weighed signs of progress in diplomatic efforts involving Iran against lingering security risks across the Middle East.
Brent crude slipped 37 cents, or 0.5 percent, to $79.08 a barrel, while US West Texas Intermediate crude fell 53 cents, or 0.7 percent, to $74.69 a barrel in early trading. Brent had finished slightly higher in the previous session, while WTI ended marginally lower.
Market sentiment softened after reports suggested talks involving Iran and Oman could help move the United States and Iran closer to a peace deal that may eventually lead to the reopening of the Strait of Hormuz, one of the world’s busiest energy shipping routes.
Yuki Takashima, an economist at Nomura Securities, said selling pressure emerged as investors reacted to signs of progress in the negotiations. He noted that oil prices have now returned to levels seen after the two sides reached an interim peace agreement in June, with markets waiting to see if a final deal can be secured.
However, uncertainty continues to cloud the outlook. Reports indicate a proposed agreement could give Iran greater influence over vessels entering the Gulf through the Strait of Hormuz, though there has been no official response from Washington.
At the same time, Iran has warned Gulf states that any future US military action could trigger retaliation against key regional energy infrastructure. Adding to supply concerns, Yemen’s Houthi group claimed missile attacks on two Saudi oil tankers, although Saudi authorities have not confirmed the incidents.
Meanwhile, fresh US inventory data also weighed on prices. The Energy Information Administration reported that crude oil stocks rose by 2.5 million barrels to 407 million barrels in the week ended July 31, surprising analysts who had expected a decline of 1.5 million barrels.