Oil turns lower as markets await Trump’s approval to extend the ceasefire

Oil prices turned lower on Thursday, giving up earlier gains, after reports said negotiators from the United States and Iran had reached a preliminary agreement to extend the ceasefire and begin talks on Iran’s nuclear program.

Brent crude, the global benchmark, fell by 58 cents to close at $93.71 per barrel, while US West Texas Intermediate crude edged up by 22 cents to $88.90 per barrel.

According to US sources speaking to CNBC, negotiators reached a 60-day memorandum of understanding aimed at extending the truce and opening negotiations over Iran’s nuclear file, although US President Donald Trump has not yet given final approval.

Prices had risen earlier in the session following an exchange of military strikes between the United States and Iran, after Iran’s Revolutionary Guard announced it had targeted a US base early Thursday without disclosing its location.

Meanwhile, US Central Command said Iran launched ballistic missiles toward Kuwait, which were successfully intercepted.

Those developments came after US forces carried out new strikes inside Iran targeting a military site that Washington said posed a threat to American forces and commercial shipping through the Strait of Hormuz, while several Iranian drones were also intercepted and shot down.

Oil prices have fallen more than 10% since May 18, when Trump announced he had halted an imminent military strike against Iran to allow more time for negotiations.

US Secretary of State Marco Rubio said on Wednesday that talks with Iran had made some progress, stressing that Trump prefers a diplomatic solution and would give negotiations “every possible chance to succeed.”

Since a fragile truce was reached in April, Washington and Tehran have remained deadlocked over the future of navigation through the Strait of Hormuz.

Iranian state television reported on Wednesday that Tehran had agreed, under a draft memorandum of understanding with the United States, to restore commercial shipping traffic through the Strait of Hormuz to pre-war levels, with joint management of the waterway between Iran and the Sultanate of Oman. However, the White House described those reports as “completely fabricated.”

Trump later stressed that “no country will control navigation through the strait.”

In the same context, Amos Hochstein, former energy adviser in the administration of former US President Joe Biden, said Middle Eastern leaders now believe Iran already exercises de facto control over the Strait of Hormuz regardless of any formal agreement.

He added: “No matter what happens, the Iranians will control the Strait of Hormuz for the foreseeable future.”

Citigroup said in a research note that oil markets have begun stabilizing as fears of a complete supply disruption scenario ease amid signs that Washington and Tehran may be moving closer toward a possible agreement.

However, the bank also warned that persistently higher oil prices could increase global inflationary pressures, potentially pushing central banks toward more hawkish monetary policies to combat inflation driven by rising energy prices.