Oil rises on doubts over US-Iran peace talks

Oil prices rose on Thursday, reversing earlier declines as markets grew skeptical of the ability of peace talks between the United States and Iran to reach an agreement ending the war that has disrupted energy supplies from the Middle East.

Brent crude contracts climbed by 67 cents, or 0.7%, to reach $95.60 per barrel at 12:05 GMT. U.S. West Texas Intermediate (WTI) crude contracts also rose by 17 cents, or 0.2%, to $91.46 per barrel.

John Evans, an oil market analyst at PVM, said: "We remain skeptical of any quick resolution to this war. Every headline is met with a counter-headline."

The U.S.-Israeli war on Iran has caused unprecedented disruption in global oil and gas markets, leading to the suspension of navigation through the Strait of Hormuz, through which approximately 20% of the world's oil and liquefied natural gas (LNG) flows normally pass.

Prospects for Resuming Peace Talks

U.S. and Iranian officials were considering returning to Pakistan for a new round of talks as early as the upcoming weekend. The Pakistani army chief also arrived in Tehran on Wednesday acting as a mediator.

A source familiar with the matter in Tehran told Reuters that Iran might consider allowing ships to sail freely through the Omani side of the Strait of Hormuz if an agreement is reached to prevent a renewal of the conflict, following the start of a two-week ceasefire on April 8.

In another sign of potential de-escalation of military actions, the Israeli government held a meeting on Wednesday to discuss the situation in neighboring Lebanon, according to a senior Israeli official, more than six weeks after the outbreak of the war with the Iranian-backed Hezbollah.

Analysts at ING bank estimate that about 13 million barrels per day of oil flows have been disrupted due to the closure of the Strait, after accounting for pipeline diversions and the limited number of tankers that managed to transit.

With the United States announcing a blockade on Iranian ports following the collapse of peace talks over the weekend, these disruptions could worsen, although some tankers under U.S. sanctions have managed to pass.

U.S. Treasury Secretary Scott Bessent stated that Washington will not renew waivers that allowed the purchase of some Iranian and Russian oil.

In a further sign of tight global supplies of oil and its derivatives, U.S. Energy Information Administration data showed that inventories of oil, gasoline, and distillates fell last week, as countries sought to compensate for affected supplies, leading to an increase in exports and a decline in imports.