Oil futures moved higher in early Asian trade after U.S. President Donald Trump announced that Washington stood ready to carry out strikes against Iran if the country refused to agree to a peace deal. At the same time, the president said he could afford to delay further military action, noting earlier signs of progress in talks with Tehran.
By 20:05 ET (00:05 GMT), Brent crude for July delivery was trading 0.5% higher at $105.53 a barrel, while West Texas Intermediate futures rose 0.9% to $94.83 a barrel. Both contracts regained ground following two days of losses that had been driven by earlier comments pointing to negotiation progress.
The rebound followed mixed signals from Washington. Although the White House flagged movement in discussions with Iran, later remarks warned that the U.S. was prepared to proceed with strikes and described the situation as "right on the borderline." The president also said he could wait "a few days" before deciding on any additional action.
Tehran responded to the U.S. warnings with a rebuke, cautioning against renewed attacks by the United States and Israel and saying such measures could significantly escalate the conflict. In parallel, Iran established a new "Persian Gulf Strait Authority" to oversee traffic through the Strait of Hormuz, having previously set out plans to impose tolls on vessels using the channel.
The Strait of Hormuz remained largely closed to normal traffic. While data showed two Chinese oil tankers had successfully passed through the channel on Wednesday, overall traffic was still only a fraction of its pre-war level. The strait is estimated to carry roughly 20% of the world’s oil, and its effective closure has been a primary factor disrupting global supply and lifting prices.
U.S. oil inventory figures released on Wednesday pointed to an outsized weekly draw in crude stocks. Officials attributed part of that decline to Washington increasing oil exports to help fill supply gaps created by the reduced throughput in Hormuz.
Market participants cited both the renewed threat of military action and continued shipping disruptions as key influences behind the uptick in oil prices. The sequence of alternating signals - negotiations on the one hand and readiness for strikes on the other - contributed to volatility in futures trading.