Oil prices rebounded modestly on Wednesday after two consecutive sessions of heavy losses, as uncertainty surrounding the recently announced U.S.-Iran agreement prompted traders to reassess expectations for a lasting resolution to the conflict.
Brent crude settled at $79.55 per barrel, up 59 cents or 0.75%, while West Texas Intermediate (WTI) crude rose 74 cents, or 0.97%, to $76.79 per barrel.
Market sentiment improved after President Trump stated that the memorandum of understanding reached with Iran was not yet finalized and warned that military action could resume if negotiations break down. The comments introduced additional uncertainty regarding the durability of the ceasefire agreement and the timeline for reopening the Strait of Hormuz.
Further support came from renewed fighting in southern Lebanon, where exchanges between Israeli forces and Hezbollah raised concerns that regional tensions could continue despite ongoing diplomatic efforts. The proposed agreement between the United States and Iran includes provisions aimed at ending hostilities involving Hezbollah and restoring stability to the region.
On the supply side, the U.S. Energy Information Administration reported that domestic crude oil inventories declined for a tenth consecutive week, pushing stockpiles to their lowest level in decades. Continued inventory drawdowns reflect strong demand and the ongoing impact of supply disruptions associated with the Middle East conflict. Analysts noted that both commercial inventories and strategic reserves continue to be used to offset lost production and restricted energy flows.
Despite the day’s gains, longer-term market outlooks remain pressured by expectations of rising global supply. The International Energy Agency projected that oil markets could move into a substantial surplus over the next several years as production growth significantly outpaces demand growth. While the recent U.S.-Iran agreement may eventually allow inventories to be replenished and supply chains to normalize, industry participants continue to expect that a full recovery in production, refining activity, and shipping volumes could take considerable time.