Market Overview

Oil prices edged lower on Wednesday, marking a third straight session of declines as market participants absorbed growing optimism that an interim agreement between the United States and Iran could restore navigation through the Strait of Hormuz.

Price Movements

At 20:54 ET (00:54 GMT), Brent crude futures for October delivery slipped 0.3%, trading at $79.12 per barrel. West Texas Intermediate (WTI) crude for September delivery fell 0.5% to $75.39 per barrel. Both benchmarks had previously dropped more than 5% on Tuesday, extending sharp losses that began on Monday.

Diplomatic Developments

Qatar announced on Tuesday that an interim proposal had been drafted as mediators worked to narrow differences between Washington and Tehran. U.S. President Donald Trump discussed de‑escalation efforts with Qatar’s Emir, Sheikh Tamim bin Hamad Al‑Thani, in a phone call on Tuesday, according to the Qatari government. The proposal seeks to re‑establish shipping through the Strait of Hormuz, a chokepoint that normally carries roughly one‑fifth of global oil and liquefied natural gas shipments. While President Trump indicated that talks with Iran had begun and warned Tehran of a “last chance” to reach an agreement, Iranian officials publicly denied that formal negotiations were taking place, underscoring lingering uncertainty.

Inventory Data

Industry data released late on Tuesday showed a build in U.S. crude stockpiles. The American Petroleum Institute (API) reported that crude inventories rose by 2.69 million barrels in the week ended 31 July, contrasting with analysts’ expectations for a draw of about 2 million barrels. Market participants now await the official U.S. Energy Information Administration (EIA) figures, scheduled for release later on Wednesday, to confirm the inventory trend.

Risk Factors

Despite the improving diplomatic signals, the security environment remains fragile. A commercial vessel was attacked near the Strait of Hormuz on Tuesday, highlighting the continued risk of disruptions to oil flows in the region.