Oil rebounds after steep sell-off as markets reassess Iran-US peace prospects

Oil prices rebounded on Thursday after suffering their sharpest drop in weeks, as investors reassessed the likelihood of a possible Iran-US peace agreement that could ease tensions in West Asia but leave major questions over sanctions and oil supply unresolved.

US West Texas Intermediate (WTI) crude futures for June delivery rose $1.07, or 1.13 per cent, to $96.15 per barrel in early trade, recovering part of Wednesday’s steep losses.

Brent crude futures for July delivery also traded higher at $102.15 per barrel, up 13 cents, or 0.13 per cent.

The rebound comes a day after benchmark oil prices tumbled nearly 7 per cent amid optimism that the US and Iran could be nearing a diplomatic breakthrough to end the ongoing conflict in West Asia.

More from Business

Investor sentiment remains highly volatile as markets attempt to gauge whether a formal agreement could ease geopolitical tensions and reduce risks to oil supply flows through the strategically critical Strait of Hormuz.

According to a report by Reuters, negotiators are close to finalising a one-page memorandum that could formally end hostilities.

Iran said on Wednesday it was reviewing a US peace proposal that could formally end the conflict, though major sticking points remain unresolved. These include Washington’s longstanding demand that Tehran suspend its nuclear programme and reopen unrestricted access through the Strait of Hormuz.

An Iranian foreign ministry spokesperson, quoted by the ISNA news agency, said Tehran would communicate its response after completing its review of the proposal.

US President Donald Trump also expressed confidence about the diplomatic push, saying he believed Iran wanted an agreement.