Oil prices bounced back on Thursday after two days of steep losses, as traders weighed the uncertain outlook for an Iran peace deal and reacted to record U.S. inventory drawdowns that raised concerns about tightening global supplies.
Brent crude futures rose 81 cents, or 0.77%, to $105.83 a barrel by 0055 GMT, while U.S. West Texas Intermediate gained 97 cents, or 0.99%, to $99.23.
Both benchmarks had plunged more than 5.6% on Wednesday after U.S. President Donald Trump said negotiations with Iran were in the final stages, though he also threatened further attacks if Tehran refused to agree.
Iran responded by warning against further strikes and announced new steps to entrench its control over the Strait of Hormuz, a waterway that once carried about 20% of global oil and gas shipments but has been largely closed since the war began.
On Wednesday, Tehran unveiled a “Persian Gulf Strait Authority” to oversee what it called a “controlled maritime zone.”
“The sharp drop in oil prices appears to be pricing within the possibility of a breakthrough in the talks,” said Yang An, analyst at Haitong Futures. “However, if Trump insists on making no concessions to Iran, an agreement seems unlikely, and the final outcome of the negotiations could reverse sharply.”
The war, which erupted after U.S. and Israeli attacks on February 28, has already forced countries to draw heavily on commercial and military reserves.
The U.S. Energy Information Administration reported the largest-ever weekly withdrawal from its National Petroleum Reserve — nearly 10 million barrels — alongside a 7.9 million-barrel decline in commercial crude inventories, far exceeding industry projections. Gasoline stocks fell by 1.5 million barrels, while distillates rose slightly.
“The drawdown in oil inventories will make it difficult for oil prices to remain low,” said Mingyu Gao, chief researcher for energy and chemicals at China Futures.
He warned that with Hormuz blocked, global refined-product and onshore crude inventories could fall below their lowest seasonal levels in five years by late May and June.