Key Points:
- Global oil prices climbed slightly after President Trump claimed peace talks with Iran are in their final stages.
- Brent crude rose 1.01% to $106.08 per barrel, but prices remain 40% higher than in late February.
- Energy experts warn that shipping delays mean global oil reserves will continue to shrink for at least 55 days.
- Iran is currently reviewing a new US draft response to its 14-point peace proposal.
Global oil prices rebounded slightly on Thursday, clawing back some ground after a steep drop on Wednesday. Traders reacted positively to comments from US President Donald Trump, who announced that negotiations with Iran have reached their final stages. The news boosted hopes that Washington and Tehran might soon sign a peace deal, potentially reopening the Strait of Hormuz and restoring normal energy flows.
Light crude rose by 1.14% to trade at $99.38 per barrel, while Brent crude climbed 1.01% to hit $106.08 per barrel. Natural gas also saw a 1.07% increase, trading at $3.036 per million British thermal units. Even with this slight relief, global energy prices remain more than 40% higher than their levels in late February, when the military conflict first erupted.
While traders eagerly buy up contracts on the possibility of a sudden peace agreement, energy strategists warn that physical markets remain in complete disarray. Joe DeLaura, a global energy strategist at Rabobank, pointed out a massive transport lag. He explained that shippers need up to 55 days to move crude oil from the Persian Gulf to its final global destinations. Consequently, global fuel inventories will continue to shrink during this nearly two-month transit window, even if the two sides sign a deal today.
Sultan Al Jaber, the Chief Executive Officer of Abu Dhabi National Oil Company, shared a similarly cautious outlook on Wednesday. He warned that Middle Eastern oil exports would not fully recover until well into 2027, even if the fighting stops immediately. Al Jaber described the closure of the Strait of Hormuz as the most severe energy supply disruption in global history.
This prolonged blockade has forced global fuel stockpiles down at a record pace this month. According to Goldman Sachs, global reserves of crude and refined petroleum products are shrinking rapidly. In the United States, crude inventories slid by approximately 7.9 million barrels last week alone. American exports also fell slightly below recent record-high levels, though overseas buyers still purchase US oil in large volumes to replace lost Middle Eastern barrels.
Some early signs of traffic returning to the Strait of Hormuz have begun to remove some of the risk premium from oil prices. Ship trackers recently spotted three massive oil supertankers attempting to cross the blockaded waterway. Meanwhile, Iranian state media claimed that 26 cargo ships and tankers successfully crossed the strait in the last 24 hours. Analysts remain skeptical of these numbers, as satellite tracking often shows much lower transit volumes than Iranian officials claim.
Despite the positive peace rumors, the threat of renewed violence hangs over the market. Trump stated that a deal would either happen soon or the US would “do some things that are a little bit nasty.” The president has repeatedly threatened to launch new military strikes against Iranian targets if Tehran rejects his final terms.
Iran’s semi-official Tasnim news agency reported that their government is currently reviewing a new draft proposal from the United States. This draft serves as Washington’s formal response to Tehran’s original 14-point peace proposal. While Iranian negotiators review the paperwork, the country’s military warned that it will launch retaliatory strikes far beyond the Middle East if the United States or Israel attacks it again.
