Brent and WTI both broke a three-session losing run, with traders scaling back bets on an imminent diplomatic breakthrough that would ease flows out of the Gulf. The move came after reporting that the Trump administration has repeatedly told mediators it has no interest in reverting to the terms of the June memorandum with Iran, pushing the market to price in a longer stretch of restricted Hormuz traffic rather than a near-term resolution. Fresh Iranian threats toward vessels breaching its transit rules, and warnings of retaliation against US-linked shipping and energy interests, added a further layer of risk premium. Diplomatic efforts continue on the margins, including a visit from Qatar’s prime minister to Tehran, but the market reaction suggests participants see limited near-term prospect of a deal.
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Oil rebounded as Washington’s rejection of a return to the Iran memorandum pushed traders to price in a longer period of constrained Middle East supply.
Summary:
- Brent settled up roughly 2%, near $90 a barrel, while WTI settled up around 1.5%, near $84, both snapping a three-day losing streak.
- The rebound followed a Wall Street Journal report that the Trump administration has repeatedly told mediators it will not revert to the terms of the June memorandum of understanding with Iran.
- The White House confirmed no active negotiations with Iran are underway, with Trump saying the US is focused on economic pressure rather than renewed talks, and reiterating that “all options remain on the table.”
- Iran warned that vessels breaching its new Hormuz transit rules could face blacklisting, while a senior security official threatened proportionate retaliation against US-linked shipping, energy, insurance and financial interests.
- Qatar’s prime minister visited Tehran to try to relaunch diplomatic efforts, ahead of the six-month anniversary of the conflict.
- Vessel traffic through the Strait of Hormuz improved slightly, to around 10 transits versus a 10-day average of roughly 15, and Kuwait’s Al-Zour refinery has restarted all three crude units at about 60% capacity after May’s drone attack.
Oil prices rose on Thursday, with Brent and West Texas Intermediate both snapping a three-day losing streak, after a Wall Street Journal report said the Trump administration has repeatedly told mediators it has no interest in reviving the terms of the memorandum of understanding it reached with Iran back in June. Brent crude settled up around 2%, close to $90 a barrel, while WTI finished up roughly 1.5%, near $84. In later trade, both benchmarks pushed to session highs, with WTI briefly touching around $84 and Brent near $89, as the rhetoric between Washington and Tehran hardened rather than eased.
The rally came despite a flurry of diplomatic activity earlier in the week aimed at restarting talks. Qatar’s prime minister travelled to Tehran on Thursday in an attempt to relaunch negotiations to end the US-Israeli war with Iran, arriving on the eve of the conflict’s six-month anniversary. But the White House was unambiguous about where things stand. Officials said no negotiations are currently taking place, and Trump told reporters in the Oval Office that the US has no interest in speaking with or meeting Iranian counterparts, framing the current approach as one of economic punishment rather than renewed diplomacy.
That stance followed Monday’s rollout of what Washington called the toughest sanctions in its history against Iran, with Treasury Secretary Scott Bessent suggesting the measures could reduce the need for further military action. Iran’s response has been defiant on two fronts: a senior parliamentary security figure dismissed the sanctions as an “inhumane and hostile act” that had already lost their bite, while Iran’s top security official warned that Tehran would target US military and economic interests, including shipping, energy, insurance and financial assets, if Washington escalated further during the ongoing mediation push. Tehran also signalled it would blacklist vessels that breach its newly imposed Hormuz transit rules.
Analysts pointed to the lack of visible progress as the real catalyst for the price move. UBS’s Giovanni Staunovo noted that continued restricted flows combined with stalled talks were prompting the market to reassess its assumptions. The Strait of Hormuz, which carried around a fifth of global daily oil and LNG supply before the conflict, saw a modest improvement in traffic, with roughly 10 vessels transiting on Wednesday against a 10-day average closer to 15. Elsewhere, Kuwait’s state oil refiner confirmed its Al-Zour refinery, which was struck by Iranian drones in May, has now restarted all three crude units at about 60% of capacity. With Iran’s nuclear programme still unresolved and Tehran retaining clear leverage over Hormuz, the risk of prolonged uncertainty in the oil market looks set to persist, particularly as separate tensions between Russia and the West over Ukraine add another layer of geopolitical unease to the backdrop.
This article was written by Eamonn Sheridan at investinglive.com.