Global oil prices moved lower on Thursday after Iran indicated that it remained willing to pursue diplomatic efforts aimed at ending its war with the United States, easing some of the geopolitical pressure that has recently pushed crude prices higher.
The decline came a day after oil prices jumped about 4%, as traders reacted to fresh developments surrounding the conflict and concerns about potential disruptions to energy supplies in the Middle East.
Brent crude futures fell by about 0.9%, while US West Texas Intermediate crude also declined. At around 0400 GMT, Brent was trading at approximately $102.13 a barrel, while WTI stood near $91.56.
Iran keeps diplomatic channel open
A senior Iranian official told Reuters that Tehran and Washington remained divided over the conditions needed to bring the conflict to an end.
However, the official said diplomatic efforts should continue, suggesting that Iran was still considering possible avenues for negotiations.
The comments followed an address by Iranian President Masoud Pezeshkian at the United Nations General Assembly, where he said Iran would not submit to US pressure.
According to the Iranian official, Tehran was reviewing Washington’s response to proposals put forward by Iran as part of efforts to find a way out of the conflict.
Strait of Hormuz remains central to negotiations
One of the most important issues in the discussions is the Strait of Hormuz, a major route for global energy shipments.
Iran’s proposals reportedly include reopening the waterway and securing an end to the US naval blockade affecting Iranian ports.
The two issues were discussed during indirect negotiations on Tuesday, according to the Iranian official.
The Strait of Hormuz is particularly important to the oil market because a significant share of global petroleum and liquefied natural gas shipments traditionally passes through the strategic waterway.
Any prolonged disruption could therefore have major consequences for international energy prices and supplies.
Iranian security official Mohsen Rezaei, however, said earlier that the strait would not be reopened until Tehran’s conditions were met.
Oil market responds to diplomatic signals
The latest decline in crude prices reflects the sensitivity of the energy market to developments surrounding the conflict.
Priyanka Sachdeva, head of market insights at Phillip Nova, told Reuters that oil prices were losing part of the geopolitical premium that had been built into prices as Gulf supplies showed signs of recovery and hopes for diplomatic progress increased.
The market had already been reacting to improving oil flows from the Gulf region before the latest Iranian comments.
Saudi Arabia, for example, has been working to restore crude shipments following disruptions caused by attacks on its energy infrastructure. The country resumed operations on its East-West pipeline to the Red Sea earlier this week, helping ease some concerns about regional supply.
US remains cautious over possible agreement
Despite Iran’s stated willingness to continue diplomacy, the United States has indicated that reaching a settlement could take time.
US Secretary of State Marco Rubio said an agreement would require extensive negotiations. He also maintained that Washington had military options available if diplomatic efforts failed.
The comments underline the uncertainty surrounding the negotiations, with the two sides still holding significantly different positions on how the conflict should end.
For oil traders, that uncertainty means prices could remain sensitive to developments in the talks, particularly any changes affecting shipping through the Strait of Hormuz.
Diesel supply concerns add pressure
Oil traders are also watching developments in the diesel market.
Ultra-low-sulfur diesel futures fell sharply during Wednesday’s trading session after reports suggested the US administration was considering a temporary restriction on diesel exports.
The White House denied reports of a planned 90-day ban, but the speculation nevertheless affected trading in refined petroleum products.
A potential reduction in US diesel exports could have consequences for international fuel markets because several regions depend heavily on American supplies.
US crude inventories also in focus
Another factor influencing the oil market is the latest US inventory data.
US crude stocks increased by about 3 million barrels, according to data from the Energy Information Administration, adding another bearish factor for crude prices.
The inventory increase comes as traders continue assessing the balance between global supply risks caused by the Middle East conflict and signs that some disrupted production and export routes are beginning to recover.
Outlook remains uncertain
Thursday’s decline does not remove the significant risks facing the global oil market.
The direction of prices is likely to remain closely tied to developments between Iran and the United States, the security of the Strait of Hormuz and the pace at which Gulf producers restore disrupted supplies.
For now, Iran’s willingness to keep diplomatic channels open has provided some relief to traders. But with Tehran and Washington still divided over the terms of a possible settlement, the market remains vulnerable to renewed volatility if negotiations fail or the conflict escalates.
