Oil prices moved higher on Thursday, recovering after two days of losses, as fresh concerns about global supply returned to the market.
Brent crude rose by 81 cents, or 0.77 percent, to $105.83 a barrel in early trading. US West Texas Intermediate also climbed 97 cents, or 0.99 percent, to $99.23.
The rebound follows a sharp fall of more than 5.6 percent on Wednesday, when prices dropped on hopes of progress in talks between the US and Iran. US President Donald Trump had said negotiations were nearing a final stage, but also warned of further strikes if a deal was not reached.
Supply risks keep market on edge
Uncertainty around the outcome of these talks continues to drive market swings. Iran has warned against any new attacks and has tightened its grip over the Strait of Hormuz, a key global shipping route.
Before the conflict, the waterway handled around 20 percent of the world’s oil and liquefied natural gas flows. It has largely remained closed since the war began on February 28, limiting supply from the region.
Iran has also announced the creation of a new authority to manage traffic in the area, calling it a controlled maritime zone. Although fighting has eased since an April ceasefire, restrictions in the strait remain in place, while the US continues to maintain pressure along Iran’s coastline.
Analysts say the recent price drop reflected hopes for a breakthrough in negotiations, but the situation remains fragile. Any setback in talks could quickly push prices higher again.
Inventory draw adds pressure
At the same time, declining oil inventories have added to supply concerns.
Data from the US Energy Information Administration showed a nearly 10 million barrel withdrawal from the Strategic Petroleum Reserve last week, marking the largest draw on record. Commercial crude stocks also fell by 7.9 million barrels, much higher than expectations of a 2.9 million barrel decline.
Gasoline inventories dropped by 1.5 million barrels, while distillate stocks saw a small increase.
The continued use of reserves highlights the pressure on global supply, as countries turn to stored oil to meet demand amid disruptions.
Market watchers say this trend could support prices in the near term. With limited flows through the Strait of Hormuz and falling stock levels, global inventories may drop below typical seasonal levels in the coming weeks, keeping the market tight.
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