By: Economy Middle East

Oil prices moved slightly higher in early Wednesday trading, recovering part of the sharp losses recorded in the previous two sessions, as investors continued to evaluate whether the Iran conflict is truly moving toward an end and whether shipping through the strategically vital Strait of Hormuz will fully resume. The waterway remains one of the world’s most important energy corridors, making every development closely watched by global markets. 

Brent crude futures rose 47 cents, or 0.6 percent, to $79.43 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 48 cents, or 0.6 percent, to $76.53 a barrel as of 00:38 GMT. Despite the modest rebound, both oil benchmarks had tumbled roughly 5 percent on Tuesday, marking a second consecutive session of heavy losses and sending prices to their lowest levels in about three months.

Traders had reacted to growing optimism that a U.S.-Iran agreement could pave the way for the restoration of oil shipments through the Strait of Hormuz, easing fears of prolonged supply disruptions. Even with improving sentiment, analysts caution that oil markets are likely to remain highly sensitive to geopolitical headlines, with WTI expected to fluctuate within a range of about $10 above or below the $80-a-barrel mark as investors continue to reassess the balance between supply risks and improving diplomatic prospects.

Peace framework

More details of the interim peace agreement emerged on Tuesday, providing markets with additional clues about the direction of negotiations. U.S. President Donald Trump said the agreement would prevent Tehran from developing a nuclear weapon, while a U.S. official indicated that Iran would be allowed to resume oil exports once the deal is formally signed. Although the memorandum of understanding has not yet been made public, it extends the fragile ceasefire first announced in April by another 60 days, giving both sides additional time to negotiate a permanent settlement.

Under the proposed framework, the United States would lift its blockade of Iranian ports, while Tehran would once again permit oil tanker traffic through the Strait of Hormuz, which has effectively remained blocked since U.S. and Israeli strikes on February 28. Even if the agreement is fully implemented, industry officials warn that restoring Iran’s oil production, refining capacity, and export infrastructure to pre-war levels will be a gradual process that could take weeks, months, or even years. As a result, traders continue to balance optimism over improving diplomacy with caution about how quickly additional supplies could reach global markets.

Regional uncertainty

Despite signs of diplomatic progress, geopolitical risks remain elevated across the region. Israel has distanced itself from both the April ceasefire and the latest U.S.-Iran agreement, raising fresh doubts about the durability of the proposed truce. The uncertainty was reinforced after Israeli drone strikes targeted three vehicles in southern Lebanon on Tuesday, killing at least four people and injuring several others, according to Lebanon’s National News Agency (NNA). In a rare public statement, Trump also criticized Israel’s military tactics, highlighting the complex political dynamics that continue to influence regional stability.

Beyond the Middle East, demand indicators also remained in focus. Data released this week showed China’s crude oil throughput in May declined 9.1 percent from a year earlier, falling to its lowest level in nearly four years. The figures suggest that Chinese refiners have increasingly relied on existing stockpiles during the Iran conflict rather than importing additional crude, pointing to softer near-term demand. Meanwhile, supply-side data from the American Petroleum Institute showed U.S. crude inventories fell by 8.3 million barrels in the week ended June 12, significantly exceeding market expectations for a 4.6 million-barrel draw. Investors are now awaiting official inventory figures from the U.S. Energy Information Administration, scheduled for release at 10:30 a.m. ET (1430 GMT) on Wednesday, for further direction on market fundamentals.