Brent crude rose toward $98 a barrel Wednesday, gaining for a third consecutive session as uncertainty surrounding U.S.-Iran peace talks kept a geopolitical risk premium embedded in oil markets. U.S. West Texas Intermediate traded around $96 after settling at $96.02 on Tuesday, when Brent closed at $97.81.
The rally has been driven by conflicting signals over the negotiations. Iranian media reports cast doubt on the progress of the talks, even as President Trump maintained that discussions remain ongoing and said a memorandum of understanding to reopen the Strait of Hormuz could be reached within the next week. The push-and-pull has left traders pricing the uncertainty itself rather than committing to a directional bet on resolution or collapse.
The three-session climb recovers part of a steep sell-off. Brent fell almost 19% in May, its worst month since the COVID-19 pandemic, as investors grew optimistic that a lasting ceasefire would reopen the strait and unlock shipping. That optimism reversed at the start of June when Iran signaled it was suspending communications over Israel’s Lebanon offensive, and prices have since rebounded as Washington insisted the talks were alive and a deal could be near.
Supply fundamentals continue to argue for higher prices. The American Petroleum Institute reported that U.S. crude inventories fell by about 6.75 million barrels in the week ending May 29. If confirmed by official Energy Information Administration data due Wednesday, it would mark the sixth consecutive weekly drawdown in U.S. crude stockpiles — a reflection of the structural undersupply created by the effective closure of the Strait of Hormuz, which has choked off roughly a fifth of global oil and LNG flows since the war began February 28.
Analysts remain cautious about how far any reopening would actually go. Bob Parker of the International Capital Markets Association has said oil prices will likely hold between $90 and $100 a barrel until there is greater clarity on a lasting peace agreement, warning that even if the strait reopens, the reopening would likely be only partial given significant damage to infrastructure, refineries, and pipelines across the Gulf, along with continuing security challenges for tanker traffic and depleted regional inventories.
The military backdrop adds a further floor under prices. U.S. Central Command said Tuesday it had defeated multiple Iranian ballistic missiles and drones and launched defensive strikes following attempted attacks, while Prime Minister Netanyahu said Israel and the U.S. are prepared to strike Iran again if necessary. With both diplomatic and military tracks active simultaneously, volatility is likely to persist regardless of which way the MOU talks break.
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