Global crude oil prices traded cautiously on Thursday as investors weighed the possibility of a peace agreement between the United States and Iran against ongoing supply disruptions and tightening fuel inventories.
Brent crude oil, the international benchmark for Nigerian crude oil, hovered near the $100 per barrel mark after suffering steep losses earlier this week while U.S. West Texas Intermediate (WTI) crude remained under pressure amid volatile trading conditions.
The market has experienced sharp swings over the past several days following reports that Washington and Tehran are moving closer to a framework agreement that could eventually reopen the Strait of Hormuz, a critical global oil transit route.
Reuters reported that oil prices recently slid to two-week lows after optimism surrounding a potential U.S.-Iran peace arrangement increased.
Brent crude briefly fell below $97 per barrel during intraday trading before recovering part of the losses.
The Strait of Hormuz remains central to market sentiment because roughly one-fifth of global oil and liquefied natural gas supplies normally pass through the route.
Analysts said hopes for reduced geopolitical tensions triggered aggressive profit-taking after crude prices surged above $110 per barrel earlier this week due to escalating military confrontations involving Iran, the United States and Gulf shipping infrastructure.
Despite the recent pullback, oil prices remain significantly higher than levels recorded before the conflict intensified earlier this year.
Reuters noted that global fuel markets continue to face pressure from disrupted supply flows and shrinking U.S. fuel inventories, particularly gasoline and diesel stocks.
The tight inventory situation has kept underlying support beneath crude prices even as diplomatic discussions improve market confidence.
Market participants are also monitoring developments surrounding “Project Freedom,” the U.S.-backed effort aimed at restoring safe passage through the Strait of Hormuz after attacks on commercial vessels and energy infrastructure in the region.
Industry analysts warned that even if a formal agreement is reached between the United States and Iran, global oil flows may take several weeks to normalize because of shipping disruptions, insurance costs and security concerns across the Gulf region.
Meanwhile, investors continue to assess the broader implications of prolonged volatility in energy markets on inflation, transportation costs and global economic growth.
Oil traders are expected to remain highly sensitive to geopolitical headlines, U.S. inventory data and any official confirmation regarding negotiations between Washington and Tehran in the coming days.
