Oil prices were little changed on Thursday, reversing earlier declines, on scepticism that peace talks between the US and Iran will reach a deal to end the war that has bottled up oil output from the key Middle East producing region.
Brent crude futures were down 26 cents to $94.67 a barrel at 0611 GMT. US West Texas Intermediate crude futures climbed 14 cents to $91.43 a barrel. Both benchmarks settled little changed on Wednesday but traded in a wide range.
The US-Israeli war on Iran has resulted in the largest-ever disruption of global oil and gas supplies due to Iran's interruption of traffic through the Strait of Hormuz, which typically carries about 20% of the world's oil and liquefied natural gas flows.
"While there are hopes for de-escalation, many investors remain sceptical, given that US-Iran talks have repeatedly broken down even after appearing to make progress," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
"Until a peace deal is reached and free navigation through the strait is restored, WTI prices are expected to continue fluctuating between $80 and $100," he added.
Analysts from ING estimate that roughly 13 million barrels per day of oil flow has been disrupted by the closure of the strait, after taking into consideration pipeline diversions and the trickle of tankers that have passed through the gateway, they said in a note on Thursday.
With the US blockade on Iranian ports announced after the collapse of peace talks over the weekend, the disruption could increase.
"The physical market is becoming tighter every day that passes without a restart of oil flows through the Strait of Hormuz," the ING analysts said.
A source briefed by Tehran told Reuters that Iran could consider allowing ships to sail freely through the Omani side of the Strait of Hormuz if a deal was reached to prevent renewed conflict after a two-week ceasefire started on April 8.
US and Iranian officials were weighing a return to Pakistan for further talks as early as the coming weekend. Pakistan's army chief arrived in Tehran on Wednesday as a mediator to try to prevent a renewal of the conflict.
US Treasury Secretary Scott Bessent said on Wednesday that Washington will not be renewing the waivers that allowed the purchase of some Iranian and Russian oil without facing US sanctions.
Underscoring the tightness of global crude and oil product supply, US inventories of oil, gasoline and distillate fuels fell last week, the Energy Information Administration said on Wednesday, as imports declined and exports jumped to meet the needs of countries searching for barrels to replace the disrupted flows.
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