Oil prices were steady during Asian deals on Thursday as optimism over easing tensions between the United States and Iran offset ongoing concerns about global supply disruptions.
By mid-afternoon AEST, Brent crude futures edged up 6 cents, or 0.1%, to US$94.99 per barrel, while U.S. West Texas Intermediate crude futures rose 44 cents, or 0.5%, to $91.73 per barrel.
Market sentiment has been supported by growing expectations that a diplomatic resolution to the conflict may be within reach.
The White House signalled optimism on Wednesday about securing a deal to end the war, while also warning that economic pressure on Tehran would intensify if negotiations fail.
A source briefed by Iranian officials told Reuters that Tehran could consider allowing ships to move freely through the Omani side of the Strait of Hormuz if an agreement is reached to prevent further escalation.
The conflict has caused unprecedented disruption to global energy flows, with Iran restricting traffic through the critical waterway, which accounts for around 20% of global oil and liquefied natural gas shipments.
Diplomatic efforts are ongoing, with U.S. and Iranian officials reportedly considering a return to Pakistan for further negotiations as early as the weekend.
Mediator Asim Munir arrived in Tehran on Wednesday in an effort to prevent a renewed escalation in hostilities.
Despite the diplomatic push, the United States continues to apply pressure. Washington has implemented a blockade on shipping from Iranian ports, with the U.S. military stating that the measures have “completely” halted maritime trade into and out of the country.
U.S. Treasury Secretary Scott Bessent also confirmed that waivers allowing purchases of certain Iranian and Russian oil without facing U.S. sanctions will not be renewed, signalling a tightening of economic restrictions.
On the supply side, U.S. government data showed that net crude oil imports fell to just 66,000 barrels per day last week, the lowest level since records began in 2001, as exports climbed to 5.2 million barrels per day — the highest in seven months.
ING Think analysts said: "With buyers shifting toward U.S. barrels, the domestic market is set to tighten as long as Middle East disruptions persist, likely prompting a supply response from U.S. producers.
"US drilling activity, however, has barely moved since the start of the conflict. According to Baker Hughes data, the U.S. oil rig count stood at 411 last week, up from 407 prior to the war.
"The lack of drilling activity also ties in with the EIA’s domestic crude oil production forecasts, which suggest little change in output this year.
"If we see a pickup in U.S. drilling activity, it would have a more meaningful impact on oil output over 2027."
Further data from the U.S. Energy Information Administration (EIA) showed crude inventories fell by 913,000 barrels to 463.8 million barrels in the week ended April 10, defying market expectations for a 200,000-barrel increase.
