Oil settles as US-Iran talks falter, Hormuz shipping remains disrupted

Oil prices stabilized on Thursday, holding onto gains from the previous session as peace talks between the United States and Iran stalled and trade restrictions through the Strait of Hormuz persisted.

Brent crude contracts for next month delivery edged down slightly by 19 cents, or 0.2%, to $101.72 per barrel by 12:17 GMT, after closing above the $100 mark on Wednesday for the first time in over two weeks. U.S. West Texas Intermediate (WTI) contracts also fell by 19 cents, or 0.2%, to $92.77 per barrel.

Both benchmarks had surged by more than $3 on Wednesday, driven by a larger-than-expected decline in U.S. gasoline and distillate inventories, coupled with a lack of progress in peace negotiations.

Bjarne Schieldrop, an analyst at SEB bank, noted: "The market may be on the verge of shifting from expecting an imminent deal to realizing it may take much longer. If expectations for the reopening of the Strait in early May collapse, prices are likely to re-price upward for both crude and products."

While President Donald Trump extended the ceasefire following a request from Pakistani mediators, both Iran and the U.S. continue to impose restrictions on vessel passage through the Strait. Prior to the war’s outbreak on February 28, the waterway handled approximately 20% of daily global oil supplies.

Tensions escalated after Iran seized two vessels in the waterway on Wednesday, tightening its grip on the strategic passage. In response, Trump maintains a U.S. naval blockade on Iranian trade, while Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf asserted that a full ceasefire is illogical unless the blockade is lifted.

Despite these restrictions, data from Vortexa showed that approximately 10.7 million barrels of Iranian crude oil exports crossed the Strait of Hormuz and left the U.S. blockade zone between April 13 and April 21.

Additionally, maritime and security sources reported that the U.S. military intercepted at least three Iranian-flagged oil tankers in Asian waters, redirecting them away from locations near India, Malaysia, and Sri Lanka.

White House spokesperson Karoline Leavitt stated that Trump has not set a definitive deadline for the extended ceasefire.

U.S. Energy Exports Hit Record High

In energy trade developments, U.S. exports of crude oil and petroleum products rose by 137,000 barrels per day (bpd) to a record high of 12.88 million bpd. Asian and European nations have increasingly turned to American supplies following disruptions caused by the war with Iran.

The U.S. Energy Information Administration (EIA) reported on Wednesday that while crude inventories rose, stocks of gasoline and distillates declined.

- Crude inventories increased by 1.9 million barrels, contrary to a Reuters poll predicting a 1.2 million-barrel drop.

- Gasoline stocks fell by 4.6 million barrels, exceeding the expected 1.5 million-barrel decline.

- Distillate stocks dropped by 3.4 million barrels, compared to a forecasted 2.5 million-barrel decrease.