Oil prices rose on Thursday after suffering heavy losses in the previous session, as investors reassessed the chances of a peace agreement in the Middle East and its impact on global oil supplies.
Brent crude increased by 78 cents, or 0.8 percent, to $102.05 a barrel, while US West Texas Intermediate crude gained 76 cents to reach $95.84 a barrel by 0400 GMT.
The rebound came a day after both benchmarks plunged more than 7 percent, touching two week lows on optimism that the conflict involving Iran could move towards a settlement. However, market sentiment shifted again after US President Donald Trump said it was still “too soon” for direct talks with Tehran. An Iranian lawmaker also reportedly dismissed the latest US proposal as unrealistic.
Analysts said oil markets remain highly sensitive to headlines linked to the Middle East crisis. Investors are closely watching diplomatic efforts ahead of a planned meeting next week between Trump and Chinese President Xi Jinping.
Iran confirmed it was reviewing a US-backed proposal aimed at ending the conflict, although major disagreements reportedly remain over Tehran’s nuclear programme and the reopening of the Strait of Hormuz. Sources involved in the talks said both sides were close to agreeing on a short memorandum to formally end the war.
Market experts warned that oil prices could remain volatile. Some analysts believe a successful peace deal may lead to a sharp fall in prices as geopolitical fears ease. On the other hand, any renewed attacks on oil infrastructure or escalation in the region could quickly push crude prices higher again.
Despite hopes for a diplomatic breakthrough, supply concerns are expected to continue in the near term. Analysts said it may take weeks for oil shipments from the Gulf to fully recover, forcing refiners to rely on stored supplies during the busy summer demand season.
Meanwhile, the US Energy Information Administration reported another decline in US crude and fuel inventories last week, reflecting tighter supply conditions caused by disruptions linked to the Iran crisis.
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