Oil prices experienced a rebound on Thursday following two consecutive days of declines, driven by persistent supply concerns stemming from the ambiguous prospects regarding the conclusion of the Iran conflict. Additionally, a reduction in U.S. inventories heightened apprehensions about the depletion of global stockpiles. Brent crude futures increased by 81 cents, representing a 0.77% rise, reaching $105.83 a barrel by 0055. Meanwhile, U.S. West Texas Intermediate futures saw an uptick of 97 cents, or 0.99%, settling at $99.23. Both benchmarks experienced a decline exceeding 5.6% on Wednesday following remarks from U.S. President Donald Trump, who indicated that negotiations with Iran were nearing completion. However, he also issued threats of additional attacks should Iran fail to reach a peace agreement.

Iran issued a warning regarding additional attacks and revealed measures aimed at solidifying its authority over the vital Strait of Hormuz waterway. Prior to the conflict, this route facilitated oil and liquefied natural gas shipments that accounted for approximately 20% of global consumption, though it has largely been rendered inaccessible. The sharp drop in oil prices appears to be pricing in the possibility of a breakthrough in the talks,” said Yang An. “However, if Trump insists on making no concessions to Iran, an agreement seems unlikely, and the final outcome of the negotiations could reverse sharply,” Yang said. On Wednesday, Iran declared the establishment of a new “Persian Gulf Strait Authority,” indicating the creation of a “controlled maritime zone” in the Strait of Hormuz. Iran effectively closed the strait in response to the U.S. and Israel attacks that initiated the conflict on February 28.

Most of the fighting has ceased following an April ceasefire; however, Iran is restricting traffic through Hormuz, while the U.S. has imposed a blockade along its coastline. The supply losses from the key Middle Eastern region due to the war have compelled countries to rapidly deplete their commercial and strategic inventories, leading to heightened concerns about the sustainability of these reserves. The U.S. Energy Information Administration reported on Wednesday that the nation withdrew nearly 10 million barrels of oil from its Strategic Petroleum Reserve last week, marking the largest drawdown on record.

The EIA reported a decrease in commercial crude inventories by 7.9 million barrels, bringing the total to 445 million barrels last week. This decline contrasts with analysts’ expectations, which, according to a poll, anticipated a draw of 2.9 million barrels. Gasoline inventories decreased by 1.5 million barrels, whereas distillate stocks increased by 372,000 barrels. The drawdown in oil inventories will make it difficult for oil prices to remain low,” stated Mingyu Gao. “With the Strait of Hormuz blocked, global refined-product and onshore crude inventories are expected to fall below their lowest levels for this time of year in the past five years by late May and late June,” Gao said.