BY COMFORT OGBONNA
Oil prices climbed more than 1% on Thursday, recovering part of the heavy losses recorded in the previous session as investors closely tracked ongoing negotiations between the United States and Iran while weighing growing concerns over tightening global supply.
Brent Crude futures rose $1.27, or 1.21%, to $106.29 per barrel, while West Texas Intermediate crude gained $1.29, or 1.31%, to trade at $99.55 per barrel.
The rebound followed a sharp selloff on Wednesday when both oil benchmarks tumbled more than 5.6% after President Donald Trump stated that negotiations with Iran were nearing a final stage. However, Trump also warned that further military action could follow if Tehran failed to agree to a peace arrangement.
Analysts said the market remains highly reactive to developments involving Iran and the broader Middle East conflict, with traders rapidly adjusting positions based on headlines surrounding diplomatic progress or escalating tensions.
According to analysts at ING, investors continue to place significant hope on reports suggesting that talks between Washington and Tehran are advancing. However, they cautioned that previous diplomatic efforts have repeatedly failed to deliver lasting agreements, creating uncertainty over whether the current negotiations will succeed.
The analysts projected that Brent crude prices could average around $104 per barrel during the current quarter as geopolitical risks remain elevated.
Iran has continued to issue warnings against additional attacks while strengthening its control over the strategically critical Strait of Hormuz, one of the world’s most important energy shipping routes. Before the conflict intensified, the waterway handled oil and liquefied natural gas shipments representing roughly 20% of global energy consumption.
On Wednesday, Iranian authorities announced the establishment of a new “Persian Gulf Strait Authority,” saying the Strait of Hormuz would operate under a “controlled maritime zone.” The move further heightened concerns among global energy markets already worried about disruptions to supply flows from the Middle East.
Iran effectively restricted access through the strait following U.S. and Israeli attacks that triggered the war earlier this year. Although major fighting largely subsided after an April ceasefire agreement, tensions remain high, and maritime traffic through the region continues to face limitations. At the same time, the United States has maintained pressure on Iran through military and naval measures along its coastline.
The conflict has already forced many countries to rely heavily on commercial oil reserves and strategic stockpiles to offset disruptions in global supply. Analysts warn that continued inventory drawdowns could tighten the market further and increase upward pressure on prices.
Data released by the U.S. Energy Information Administration showed that the United States withdrew nearly 10 million barrels of oil from its Strategic Petroleum Reserve last week, marking the largest drawdown on record.
Additional support for oil prices came from separate government data showing a larger-than-expected decline in U.S. crude inventories. The sharper inventory drop signaled stronger demand and ongoing supply pressures in the global energy market.
Mingyu Gao, chief researcher for energy and chemicals at China Futures, said the continued decline in inventories may make it difficult for oil prices to remain significantly lower in the near term.
He added that restrictions around the Strait of Hormuz could push global refined fuel and onshore crude inventories below seasonal averages recorded over the past five years by late May and June.
The situation has intensified concerns among governments and energy traders over the possibility of prolonged supply disruptions in one of the world’s most critical oil-producing regions. Investors are now expected to remain highly focused on diplomatic developments, military activity and inventory data as markets attempt to gauge the next direction for crude prices.
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