(April 15): Oil held a drop on Wednesday, with the US and Iran looking to arrange a second round of peace talks in the coming days, as a blockade of the Strait of Hormuz continued to impede energy supplies vital for the world economy.
Brent steadied below US$95 ($120.77) a barrel after losing 4.6% on Tuesday, while West Texas Intermediate (WTI) was near US$91. The objective is to hold more talks before a ceasefire expires next week, people familiar with the matter said. One proposal is a return to Pakistan, though other venues are being considered.
US President Donald Trump said talks could resume “over the next two days”, the New York Post reported. He saw the war as being “very close to over”, Fox Business anchor Maria Bartiromo said after interviewing the US leader.
In the meantime, the US is pressing on with its blockade of Hormuz to curb the Islamic Republic’s oil exports. Admiral Brad Cooper, the commander of US Central Command, hailed the action, saying “US forces have completely halted trade going into and out of Iran by sea”, according to a post on X.
For its part, Tehran is considering a pause to shipments through the waterway to avoid testing the US cordon, according to a person familiar with the matter. Since the war began, Iran has prevented the passage of almost all shipping through the key route, which links the Persian Gulf to wider markets.
The global oil market has been jolted by the conflict, which triggered an unprecedented supply shock. Surging prices for physical crude and products such as gasoline are squeezing consumers and hurting demand, with the International Energy Agency forecasting a drop in consumption this year.
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“In the near term, oil is likely to move sideways with a softer bias, as the market digests the shift toward diplomacy,” said Dilin Wu, a research strategist covering cross-asset markets at Pepperstone Group.
“However, even if geopolitical tensions ease at the margin, any meaningful recovery in physical supply will lag”, with logistical bottlenecks off Hormuz keeping a floor under prices, Wu added.
Should escalation risks fade, oil supply from the Middle East may see a “tiered recovery”, with two million to three million barrels a day of output likely to be restored in the first four weeks, according to ANZ Group Holdings Ltd.
See also: IEA says Gulf can resume half of shut oil fields weeks after war
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In a bid to exert further pressure on Tehran, the Trump administration will allow a waiver temporarily authorising the purchase of certain Iranian crude to expire this weekend, according to the Treasury Department.
“Headlines continue to dominate price action, with markets leaning toward a normalisation of flows by the end of April,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Sustained increases in traffic will be the key signal to watch, alongside the trajectory of negotiations.”
In the US, the American Petroleum Institute reported nationwide crude inventories rose 6.1 million barrels last week. If confirmed by official data later on Wednesday, that would mark the eighth consecutive build.
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