By: Economy Middle East

Oil prices edged higher on Wednesday as the collapse of talks between Iran and the United States over a final agreement to end their conflict heightened concerns that supply disruptions in the key Middle Eastern oil-producing region could persist.

As of 4:30 GMT, Brent crude futures gained 29 cents, or 0.40 percent, to $73.24 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 27 cents, or 0.39 percent, to $69.77 a barrel.

Brent posts largest quarterly drop since 2008 global financial crisis
Market sentiment remained cautious as shipping through the Strait of Hormuz gradually resumed, although vessel movements continue to be uneven and visibility over the route remains limited. Analysts said oil prices are unlikely to resume their downward trend until Washington and Tehran reach a clearer diplomatic understanding, with traders expected to wait for sustained signs of stability before turning bearish again.

On Tuesday, U.S. President Donald Trump’s son-in-law, Jared Kushner, and special envoy Steve Witkoff arrived in Doha for high-level talks. However, Iranian officials and Qatari authorities said the U.S. delegation would engage with mediators rather than hold direct discussions with Iran. Qatar added that Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani was among the officials meeting with Witkoff and Kushner.

Despite the latest gains, oil prices posted steep quarterly declines. Brent crude lost about $45 per barrel between the first and second quarters, marking its largest quarterly drop since the 2008 global financial crisis. Meanwhile, U.S. West Texas Intermediate crude fell by roughly $31 per barrel, its sharpest quarterly decline since 2020, when the COVID-19 pandemic severely impacted global fuel demand.

The declines came as progress toward ending the Middle East conflict erased much of the risk premium that had driven oil prices higher during the hostilities.

Investors await EIA crude oil inventories data

Analysts lowered their 2026 oil price forecasts for the first time since the Iran conflict began. Morgan Stanley also revised down its 2027 Brent crude oil price outlook, citing a significantly looser global supply-demand balance and expectations of a sizeable market surplus. The bank said it now expects Brent to average $75 per barrel in the first half of 2027 and $70 per barrel in the second half, reflecting a more bearish medium-term trajectory than earlier estimates.

U.S. Vice President JD Vance also sought to reassure markets, saying Iran would not be allowed to impose transit fees on vessels passing through the strategic waterway. Tanker traffic through the key shipping route has begun to recover, with Vance stating that oil flows have returned to pre-conflict levels.

Supporting prices further, industry data showed U.S. crude oil inventories declined for a second consecutive week, while gasoline stockpiles also fell. Investors are now awaiting official inventory data from the U.S. Energy Information Administration (EIA), scheduled for release at 14:30 GMT on Wednesday, for further clues on fuel demand and supply trends.