By: Economy Middle east

Oil prices rose on Thursday, recovering some of the steep losses recorded in the previous session as investors assessed the likelihood of a successful Middle East peace agreement.

By 4:07 GMT, Brent crude futures had advanced 83 cents, or 0.82 percent, to $102.1 per barrel, while U.S. West Texas Intermediate crude rose 79 cents, or 0.83 percent, to $95.87 per barrel.

Both benchmarks had tumbled more than 7 percent on Wednesday, touching two-week lows amid optimism that the conflict in the Middle East could ease.

Oil supplies to remain tight

Oil prices regained some ground after U.S. President Donald Trump said it was “too soon” for direct talks with Tehran, while a senior Iranian lawmaker described the U.S. proposal as more of a “wish list” than a realistic plan.

Peace negotiations are expected to continue at least until next week’s U.S.-China summit, although uncertainty remains over what could follow afterward. Trump and Chinese President Xi Jinping are set to meet next week.

Meanwhile, Iran said on Wednesday that it was examining a U.S. peace proposal which would officially bring the war to an end while leaving unresolved major U.S. demands, including Iran halting its nuclear program and reopening the Strait of Hormuz.

Even if a peace agreement is secured, oil supplies are still expected to remain tight in the coming weeks, as it could take time for crude shipments from the Gulf to resume and reach refiners globally. As a result, oil companies are likely to keep drawing from storage reserves to meet peak summer demand.

U.S. crude and fuel inventories fall

Markets remained highly sensitive to developments surrounding the Strait of Hormuz, a vital maritime chokepoint that handles around one-fifth of global oil trade. Capping Thursday’s gains in oil prices, however, were fresh U.S. inventory data from the Energy Information Administration showing another decline in crude stockpiles.

The EIA said U.S. commercial crude inventories, excluding the Strategic Petroleum Reserve, dropped by 2.3 million barrels in the week ended May 1 to 457.2 million barrels. Analysts had forecast a steeper decline of 3.4 million barrels.

Gasoline inventories decreased by 2.5 million barrels, while distillate stocks, including diesel and heating oil, fell by 1.3 million barrels.

The report also pointed to robust petroleum exports, highlighting sustained global demand for U.S. energy supplies as disruptions to Middle East oil flows persist.