Oil prices moved slightly lower in early Asian trade on Wednesday as markets weighed signs of diplomatic movement between the United States and Iran against persistent supply disruptions in a key shipping lane.
West Texas Intermediate crude for July delivery was down 0.3% at $98.88 a barrel by 19:50 ET (23:50 GMT). The contract had declined about 1% on Tuesday.
Diplomatic signals
Prices eased after U.S. officials indicated progress in talks with Tehran. On Tuesday, U.S. President Donald Trump said he had postponed an attack on Iran and described negotiations as going well. He added that the war in Iran will end "very quickly." Vice President JD Vance reiterated that he believed Iran wanted to make a deal.
Supply-side constraints
Despite the softer tone from Washington, losses in crude were limited by continued disruptions to shipping through the Strait of Hormuz. Traffic through the waterway remained at a fraction of pre-war levels, a situation that affects about 20% of the worlds oil supply.
In addition, the U.S. on Monday extended a sanctions waiver on seaborne Russian oil, a move intended to allow countries vulnerable to oil import disruptions to secure supply.
Negotiation positions and regional demands
State media reported that Iran's latest peace proposal calls for an end to hostilities on all fronts, the withdrawal of U.S. forces from the region, and reparations for war-related damage. The U.S. has largely rejected Iran's earlier proposals, maintaining that curbing Iran's nuclear ambitions remains a central objective of any agreement.
Inventory data in focus
Market attention is turning to upcoming U.S. inventory figures for further clarity on stockpile trends amid the ongoing supply disruptions. Data from the American Petroleum Institute showed a 9.1 million barrel (mb) draw last week, substantially larger than expectations for a 3.4 mb draw.
With diplomatic signals and supply reports both influencing sentiment, traders are awaiting additional data and developments to gauge whether the recent price moves will continue or reverse.