Oil prices increased by approximately $1 in early trading on Thursday, recovering from the significant declines observed the previous day, as investors assessed the potential for a successful peace agreement in the Middle East. Brent crude futures experienced an increase of 88 cents, representing a 0.9% rise, reaching $102.15 per barrel as of 0032. U.S. West Texas Intermediate increased by $1.12, representing a 1.2% rise, reaching $96.20 per barrel. Both benchmarks experienced a decline exceeding 7% on Wednesday, reaching two-week lows amid optimism regarding a potential resolution to the conflict in the Middle East. They reduced their losses, following remarks from U.S. President Donald Trump, who indicated that it was “too soon” for direct negotiations with Tehran.

Additionally, a senior Iranian lawmaker characterized the U.S. proposal as more of a wish list than a feasible plan. “While peace negotiations are likely to continue at least until next week’s U.S.-China summit, the outlook beyond that remains uncertain,” stated Hiroyuki Kikukawa. Trump and Chinese President Xi Jinping are scheduled to meet next week. Kikukawa stated, “The main scenario is that oil prices will remain elevated.” On Wednesday, Iran announced that it was evaluating a U.S. peace proposal, which sources indicated would officially conclude the war, yet would leave unaddressed the critical U.S. stipulations for Iran to halt its nuclear program and to reopen the Strait of Hormuz. An Iranian foreign ministry spokesperson, as reported, indicated that Tehran would communicate its response. Trump expressed his belief that Iran was seeking an agreement.

A source involved in the mediation efforts in Pakistan, along with another individual familiar with the discussions, indicated that a consensus was nearing on a one-page memorandum intended to formally conclude the conflict. It was reported that the U.S. anticipates Iranian responses on several key points within the next 48 hours, with sources indicating that this represents the closest the parties have approached an agreement since the onset of the war. Even if a peace deal is reached, oil supplies are anticipated to tighten further in the coming weeks due to the time required for oil shipments to resume from the Middle East Gulf and reach refiners globally. Consequently, oil companies will persist in depleting storage tanks to satisfy peak summer demand.

Last week, U.S. crude and fuel inventories experienced a continued decline, as nations endeavored to mitigate supply disruptions stemming from the Iran crisis, according to the Energy Information Administration’s report on Wednesday. Crude stocks experienced a decline of 2.3 million barrels, reaching a total of 457.2 million barrels last week. This figure contrasts with the analyst expectations indicated in a poll, which anticipated a draw of 3.3 million barrels.