Oil prices experienced a modest increase in early trading on Wednesday, recovering some of the losses incurred in the previous session, as investors evaluated the potential conclusion of the conflict in Iran and the possibility of the Strait of Hormuz reopening. Brent crude futures increased by 47 cents, representing a 0.6% rise, reaching $79.43 a barrel. Meanwhile, U.S. West Texas Intermediate climbed to $76.53 a barrel, up 48 cents, also a 0.6% increase, as of 0038. Both benchmarks declined approximately 5% for a second consecutive session on Tuesday, reaching three-month lows amid optimism that a U.S.-Iran agreement would facilitate oil flows through the Strait. Oil markets experienced a pullback as expectations grew regarding the reopening of the Strait of Hormuz following the peace agreement.

However, traders refrained from additional selling while awaiting further details, according to Hiroyuki Kikukawa. WTI is expected to exhibit volatility, fluctuating within a range of $10 above or below $80 per barrel, he added. Details of the interim peace deal began to emerge on Tuesday, with U.S. President Donald Trump stating that it would eliminate the prospect of a nuclear weapon for Tehran. Additionally, a U.S. official indicated that the agreement would permit Iran to sell oil upon signing. The memorandum of understanding, which remains undisclosed, prolongs the fragile ceasefire declared in April by an additional 60 days to facilitate discussions aimed at establishing a lasting peace agreement.

Under the agreement, the United States would remove its blockade of Iran’s ports, while Tehran would facilitate oil tanker traffic through the Strait, which has been effectively obstructed since the strikes by the U.S. and Israel on February 28. Nevertheless, industry officials indicate that a complete restoration of production and refining levels to those seen before the conflict is expected to require weeks, months, or potentially years. Israel has distanced itself from both the April ceasefire and the latest U.S.-Iran agreement, introducing ambiguity regarding the durability of the new truce. Israeli drone strikes engaged three vehicles in southern Lebanon on Tuesday, resulting in the deaths of at least four individuals and injuring others, according to Lebanon’s National News Agency. Trump issued a notable public criticism of Israel’s military tactics.

Meanwhile, China’s crude oil throughput in May decreased by 9.1% year-on-year, reaching the lowest level in nearly four years, according to data. This decline also indicates that refiners are beginning to utilise stockpiles in response to the ongoing conflict in Iran. The American Petroleum Institute report indicated that U.S. crude stocks decreased by 8.3 million barrels during the week ending June 12, according to sources. It surpassed projections for a 4.6 million barrels draw, with official figures scheduled for release by the Energy Information Administration at 10:30 a.m. on Wednesday.