Oil prices moved higher on Thursday, supported by skepticism that upcoming U.S.-Iran negotiations will deliver a near-term resolution to ongoing supply disruptions in the Middle East. Brent crude rose $4.46, or 4.7%, to settle at $99.39 per barrel, while U.S. West Texas Intermediate (WTI) gained $3.40, or 3.7%, to $94.69.
The rally reflects persistent concerns over constrained flows through the Strait of Hormuz, where traffic remains significantly limited. The continued disruption—impacting a substantial share of global oil and LNG shipments—is tightening supply conditions as inventories are steadily drawn down.
Despite ongoing diplomatic efforts, market participants remain cautious about the likelihood of a comprehensive agreement. Current discussions appear to be focused on more limited arrangements aimed at preventing further escalation rather than fully restoring supply flows. As a result, prices showed little reaction to more optimistic political statements.
Supply constraints are increasingly visible in inventory data, with U.S. crude stocks posting an unexpected draw alongside declines in gasoline and distillate inventories, driven in part by stronger export demand as buyers seek alternatives to Middle Eastern supply.
Estimates suggest a significant volume of global oil flows remains disrupted due to the closure of the Strait, continuing to strain physical markets—particularly in regions reliant on imported fuels.
While there are indications that negotiations could resume in the near term, any meaningful recovery in flows is likely contingent on a broader agreement. In the interim, ongoing restrictions—including the U.S. blockade of Iranian exports—pose additional downside risks to supply.
Overall, the market remains supported by tight fundamentals and a sustained geopolitical risk premium, with price direction closely tied to developments in negotiations and the pace of any potential supply restoration.