Oil prices swung sharply on Thursday as headlines about Iran's pending response to a US proposal to end the war alternated through the morning, with intraday moves of around 6 per cent in both Brent and West Texas Intermediate.
Brent crude was last quoted at $101.96 a barrel, up 0.7 per cent on the day, after touching a session low near $94. WTI traded at $95.66, also up about 0.6 per cent. A senior Iranian official appeared to rebuff parts of the latest US text mid-morning, sending prices higher; subsequent reporting that talks were continuing pulled them back.
A potential reopening of the Strait of Hormuz to commercial shipping is the single most important factor for the market. The strait carries roughly a fifth of seaborne crude. A clean reopening would likely push Brent back into the $80s; a breakdown of talks could send prices to the levels seen at the height of fighting.
OPEC+ has held its production targets unchanged through the conflict, with Saudi Arabia and the United Arab Emirates absorbing most of the Iranian export shortfall through stepped-up shipments via the Red Sea and the Gulf of Oman.
Refiners in Asia have largely managed elevated input costs by drawing down product inventories. Several Indian and Chinese refineries booked spot cargoes from West Africa and Brazil this week as a hedge against further interruption.
Equity markets have correlated closely with oil over the past week. Energy stocks underperformed the broader S&P 500 on Thursday morning by more than two percentage points before paring losses.