Global oil prices bounced back Thursday after a steep sell-off, as traders refocused on rising supply risks tied to Iran and a sharp decline in U.S. crude inventories.
Brent crude futures gained 81 cents to reach $105.83 per barrel in early trading, while U.S. West Texas Intermediate crude rose 97 cents to $99.23. The recovery followed two straight days of losses triggered by comments from U.S. President Donald Trump about ongoing negotiations with Iran.
Markets had plunged Wednesday after Trump said talks with Tehran were nearing a final stage. He also warned that the United States could launch further attacks if Iran refused to agree to a peace deal. The mixed signals created confusion across energy markets already under pressure from disrupted Middle East supplies.
Investors quickly shifted their attention back to the Strait of Hormuz, one of the world’s most critical energy shipping routes. Before the conflict, the narrow waterway handled oil and liquefied natural gas shipments equal to roughly 20% of global consumption.
Traffic through the strait has been heavily restricted since the war began earlier this year.
Iran intensified concerns Wednesday by announcing the formation of a new “Persian Gulf Strait Authority.” Officials said the body would oversee a “controlled maritime zone” in the Strait of Hormuz.
Iran effectively shut down the strait after U.S. and Israeli attacks sparked the conflict on February 28. Although major fighting slowed after an April ceasefire, tensions remain high. Iran continues to limit maritime movement, while the U.S. maintains a blockade along Iran’s coastline.
Analysts say the market reaction shows how fragile confidence remains.
“The sharp drop in oil prices appears to be pricing in the possibility of a breakthrough in the talks,” said Yang An, analyst at Haitong Futures.
“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.
Supply shortages from the Middle East have already forced several countries to tap emergency reserves and commercial stockpiles at an aggressive pace. Fresh U.S. government data added to those worries.
The U.S. Energy Information Administration reported that nearly 10 million barrels were withdrawn from the Strategic Petroleum Reserve last week. The move marked the largest drawdown ever recorded from the emergency stockpile.
Commercial crude inventories also dropped sharply. U.S. crude stockpiles fell by 7.9 million barrels to 445 million barrels, far exceeding analysts’ expectations of a 2.9 million-barrel decline.
Gasoline inventories declined by 1.5 million barrels, while distillate supplies rose modestly by 372,000 barrels.
Energy researchers warned that shrinking inventories could push prices even higher if supply routes remain blocked.
“The drawdown in oil inventories will make it difficult for oil prices to remain low,” said Mingyu Gao, chief researcher for energy and chemicals at China Futures.
“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.
