Oil prices turned lower on Wednesday after rising by about a dollar in early Asian trading, as investors assessed the prospects for peace talks between the United States and Iran following Washington's announcement of a ceasefire extension.
Brent crude futures fell 21 cents, or 0.2 percent, to $98.27 a barrel at 00:39 GMT, after touching $99.38 earlier in the session. West Texas Intermediate (WTI) crude futures also declined, dropping 28 cents, or 0.3 percent, to $89.39, after rising to $90.71. Both benchmark contracts had risen by about 3 percent on Tuesday.
US President Donald Trump announced he would extend the ceasefire with Iran indefinitely, just hours before it was set to expire, to allow for continued talks aimed at ending the war that has killed thousands and shaken the global economy. The move appeared unilateral, and it was not immediately clear whether Iran or Israel would agree to extend the truce, which began two weeks earlier.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said: “With the outcome of the talks unclear and the Strait of Hormuz still closed, the market lacks a clear direction. Unless fighting resumes, prices are likely to remain close to their current levels for the time being.”
Trump also stated that the US Navy would maintain its blockade of Iranian ports and coastlines, a move Iranian leaders described as an act of war. There was no immediate comment from senior Iranian officials regarding an extension of the ceasefire, but the Tasnim news agency, affiliated with the Revolutionary Guard, reported that Iran had not requested an extension and reiterated its position of breaking the US blockade by force.
Shipping data showed that traffic through the Strait of Hormuz, which normally carries about 20 percent of the world's oil and liquefied natural gas supplies, remained largely at a standstill on Tuesday, with only three ships passing through in the past 24 hours.
In another development, the Israeli military said that Hezbollah fired rockets at its forces in southern Lebanon, accusing the Iranian-backed group of violating the ceasefire ahead of US-mediated talks with Lebanon this week. There was no immediate comment from Hezbollah.
In Europe, Ukrainian President Volodymyr Zelenskyy stated that the Druzhba pipeline, which carries Russian oil to the continent, is ready to resume operations. However, three industry sources reported that Russia intends to halt oil exports from Kazakhstan to Germany via this pipeline starting May 1st.
The U.S. Energy Information Administration is scheduled to release official inventory data later on Wednesday. Market sources, citing figures from the American Petroleum Institute, reported that crude oil inventories fell by 4.5 million barrels last week, while gasoline and distillate stocks also declined. Analysts had expected a draw of 1.2 million barrels for the week ending April 17.