Oil prices increased on 21 May as investors weighed the outcome of peace negotiations between the US and Iran, alongside signs of tightening supply and notable reductions in US petroleum inventories.
By 08:09 GMT, Brent crude futures had increased by $0.40, or 0.4%, to reach $105.42 per barrel (bbl), reported Reuters.
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Meanwhile, US West Texas Intermediate (WTI) futures had risen by $0.50, or 0.5%, to $98.76/bbl.
Both benchmarks fell more than 5.6% on Wednesday to their lowest level in more than a week following US President Donald Trump’s announcement that talks with Iran were nearing conclusion.
Trump also warned of further attacks if Tehran did not consent to a peace agreement.
In response, Iran cautioned against additional attacks and announced measures to strengthen its control over the Strait of Hormuz, which is largely closed.
On Wednesday, Iran announced the formation of a “Persian Gulf Strait Authority” and the establishment of a “controlled maritime zone” in the Strait of Hormuz.
Iran closed the strait in response to US and Israeli attacks that initiated the conflict in February this year.
Although fighting reduced following the April ceasefire, Iran continues to restrict Hormuz traffic while the US maintains a blockade on its coastline.
Before the conflict, this strait handled oil and liquefied natural gas (LNG) shipments amounting to around 20% of global consumption.
The war and resulting supply losses in the key Middle Eastern region have led countries to rapidly deplete their commercial and strategic reserves.
The US Energy Information Administration (EIA) reported a record withdrawal of roughly ten million barrels from its Strategic Petroleum Reserve last week.
EIA data also indicated an unexpectedly large reduction in US crude oil inventories, reflecting the impact of supply disturbances.
Meanwhile, shipping data on LSEG and Kpler showed that three supertankers traversed the Strait of Hormuz on Wednesday, reported Reuters.
These ships are destined for Asian markets after being delayed in the Gulf for more than two months with a cargo of six million barrels (mbbl) of Middle Eastern crude.
Following the same transit route mandated by Iran, several vessels, including South Korean very large crude carrier (VLCC) the Universal Winner, loaded with 2mbbl of Kuwaiti crude exited the strait.
The tanker is en route to Ulsan, South Korea, where it is scheduled to unload on 9 June at SK Energy’s refinery.
