By Elsie Kamsiyochi
Global oil prices moved lower on Thursday after reports suggested that the United States and Iran may be moving toward a temporary diplomatic agreement, easing fears of a broader conflict in the Middle East and reducing concerns over potential disruptions to global energy supplies.
Earlier in the trading session, oil prices had surged more than 2% amid growing tensions between Washington and Tehran. Investors reacted nervously after Iran’s Revolutionary Guards claimed responsibility for targeting a U.S. airbase in retaliation for an earlier American strike near the strategic Iranian port city of Bandar Abbas. The exchange of military action had raised fears of a wider regional escalation that could threaten vital oil shipping routes, particularly through the Strait of Hormuz — one of the world’s most important energy corridors.
However, market sentiment shifted dramatically after a media report from Axios indicated that the U.S. and Iran had reached the framework of an agreement involving a proposed 60-day ceasefire extension. According to sources cited in the report, the arrangement would also include the reopening of diplomatic talks surrounding Iran’s nuclear program, a development that many traders viewed as a potential step toward reducing geopolitical tensions in the region.
As optimism over diplomacy spread through financial markets, oil prices reversed their earlier gains. Brent crude futures fell by 22 cents, or roughly 0.2%, settling near $94.07 per barrel during mid-morning trading in the United States. Meanwhile, U.S. West Texas Intermediate (WTI) crude remained relatively unchanged at approximately $88.68 a barrel, reflecting investor caution as markets waited for official confirmation.
Despite the reported progress, uncertainty still hangs over the proposed arrangement. According to Axios, the deal has yet to receive final approval from U.S. President Donald Trump, who reportedly informed mediators that he would take several days to review the proposal before making a final decision. This hesitation has left traders balancing optimism about diplomacy against the possibility of renewed military escalation.
Energy markets have remained highly volatile in recent weeks as tensions involving Iran, the United States, and regional allies continue to threaten stability across the Middle East. The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, remains a major point of concern. Any disruption to shipping in the narrow waterway could trigger sharp price spikes and further strain already sensitive global energy markets.
Analysts say traders are closely monitoring every military development and diplomatic signal coming from both Washington and Tehran. While the possibility of renewed negotiations has offered temporary relief to markets, investors remain wary that even minor setbacks or fresh attacks could quickly reignite fears of supply disruptions and send crude prices climbing again.
For now, hopes of diplomacy appear to have outweighed immediate fears of conflict, leading oil prices to retreat from earlier highs. Yet with the proposed agreement still awaiting political approval, markets remain on edge, watching closely for signs of either peace or renewed confrontation.
Source Reuters
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