Oil prices rebound over 2% as Middle East signals and U.S. stocks drive volatility

Oil futures recover after prior session losses

Brent Oil Futures expiring in May rose 2.3% to $104.54 per barrel in Asian trading on Thursday. U.S. benchmark Crude Oil WTI Futures also gained 2.3%, reaching $92.32 per barrel. The move higher followed a session in which both contracts had slipped more than 2%, reflecting rapid shifts in the geopolitical risk premium embedded in crude prices.

Recent weeks have seen heightened volatility as the conflict in the Middle East disrupted energy flows from the Gulf, a region that is critical to global crude supply. Brent crude had surged above $119 a barrel earlier this month on concerns over potential supply outages.

Geopolitics and inventories pull prices in opposite directions

Markets focused on diplomatic developments in Tehran, where officials are reportedly reviewing a U.S.-backed proposal aimed at halting hostilities. Iran has not formally accepted the plan but has also stopped short of outright rejection, which has raised cautious hopes of a possible path toward de-escalation. At the same time, Iran has publicly denied direct negotiations with Washington and signalled that key differences remain, leaving traders uncertain about the outlook.

The Strait of Hormuz, a vital transit route for roughly a fifth of global oil shipments, remains central to market concerns as any sustained disruption could affect global supply. On Wednesday, oil prices fell after reports of potential negotiations reduced some of the geopolitical risk premium that had built up in crude markets. Conflicting signals from Washington, including warnings of stronger measures if Iran does not engage constructively, added to the uncertainty.

Beyond geopolitics, U.S. inventory data exerted downward pressure on prices. Figures from the Energy Information Administration released on Wednesday showed U.S. crude inventories rising by 6.93 million barrels last week, against expectations for a 1.3 million-barrel draw. Distillate stockpiles increased by 3.03 million barrels, also defying expectations for a 1.3 million-barrel draw, pointing to sluggish demand for diesel and heating fuels.

FAQ

What were the latest trading levels for Brent and WTI futures?
Brent Oil Futures expiring in May traded at $104.54 per barrel, up 2.3%, while Crude Oil WTI Futures rose 2.3% to $92.32 per barrel in Asian trade on Thursday.

How have geopolitical developments influenced oil prices?
Conflicting signals around de-escalation in the Middle East, including Iran’s review of a U.S.-backed proposal to halt hostilities without formally accepting or rejecting it, have kept traders cautious and contributed to recent volatility in oil prices.

What did the latest U.S. inventory data show?
U.S. crude inventories increased by 6.93 million barrels last week, compared with expectations for a 1.3 million-barrel draw, while distillate stockpiles rose by 3.03 million barrels against forecasts for a 1.3 million-barrel draw, indicating weaker demand for diesel and heating fuels.

Why is the Strait of Hormuz important for oil markets?
The Strait of Hormuz is a key shipping chokepoint through which roughly a fifth of global oil shipments pass, making it a focal point for markets concerned about potential disruptions to global crude supply.