Oil Prices End Mixed as Markets Watch U.S.-Iran Talks and Strait of Hormuz Developments

International oil prices moved unevenly on Wednesday (5th), with Brent crude futures rising 9 cents, or 0.11%, to close at $79.45 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures declined 55 cents, or 0.73%, to settle at $75.22 per barrel.

Investors continued to assess the potential for de-escalation in U.S.-Iran tensions and the possibility of resumed shipping through the Strait of Hormuz, which could restore oil supplies from the Middle East.

U.S. President Trump said Tuesday that the U.S. had engaged in "a full day of negotiations" with Iran, describing the talks as positive, while warning that if no agreement is reached, the U.S. would "strongly strike" Iran.

Iran has denied that peace talks have begun. However, Iran's Foreign Ministry stated on Wednesday that Iran and Oman have reached an agreement on managing the Strait of Hormuz and are preparing to issue a joint statement.

Before the outbreak of conflict at the end of February, approximately 20% of the world's crude oil and liquefied natural gas (LNG) shipments passed through the Strait of Hormuz.

Phil Flynn, senior analyst at Price Futures Group, said markets remain optimistic but cautious: "This agreement looks as fragile as past ones, and we all know none of those previous agreements lasted very long."

Market expectations of progress in ceasefire talks drove Brent crude down sharply by 5% on Tuesday, closing below $80 per barrel for the first time since July 13.

Analysts at IG noted that the biggest sticking point in current negotiations remains whether Iran will continue to insist on partial control over the Strait of Hormuz, and whether the U.S. will reject such an arrangement.

Lower refinery runs in the U.S., coupled with a slight increase in crude imports, have also exerted some downward pressure on oil prices.

The U.S. Energy Information Administration (EIA) reported that, as of last week, commercial crude oil inventories in the U.S. rose by 2 million barrels to 407 million barrels—significantly higher than the market's initial expectation of a 1.5 million barrel drawdown.

Andrew Lipow, president of Lipow Oil Associates, said WTI underperformed mainly because inventory builds at the Cushing, Oklahoma delivery hub exceeded market expectations.

However, shipping risks in the Red Sea continue to limit oil price declines. Yemen's Iran-aligned Houthi movement said Wednesday it attacked a Saudi oil tanker off Yanbu, Saudi Arabia—an important crude export terminal.

In addition to the Persian Gulf, both Russia and Ukraine have intensified attacks on vessels, ports, and export facilities in the Black Sea, continuing to disrupt global commodity supplies.

Market sources indicated that the Caspian Pipeline Consortium (CPC), Kazakhstan's main crude export route, was halted multiple times this week due to security concerns and tanker shortages.

On the other hand, China further relaxed fuel export controls in August, introducing a new variable into market supply dynamics.