Oil trading was tepid on Wednesday as market participants assessed the seemingly endless cycle of hostility, contradictory signals, and temporary pauses characterizing U.S.-Iran relations — with Iran's most recent declaration being that it will continue developing nuclear weapons as long as the United States and Israel possess them.

Given Washington's stated determination to continue striking Iran until its nuclear capabilities are eliminated, analysts prepared for a prolonged standoff between the two nations and further potential disruption to oil shipments through the Strait of Hormuz, through which roughly a fifth of global oil consumption transits daily.

After U.S. President Donald Trump indicated that an "all-day negotiation" was underway with Iran — a claim Tehran denied — Brent crude futures settled up 9 cents at $79.45 per barrel, while West Texas Intermediate futures declined 55 cents to $75.22 per barrel. The muted price reaction underscored a market that has grown accustomed to rapid-fire headlines from the conflict cycle, with each flash of de-escalation quickly tempered by counter-claims.

Market Skeptical of Reported Hormuz Agreement

The market appeared largely unimpressed by reports of a draft deal concerning the Strait of Hormuz. Two regional officials told the Associated Press that an agreement between Iranian and Omani negotiators had been finalized. Under the proposed arrangement, ships entering the Persian Gulf would be directed through waters controlled by Iran, while vessels exiting the Gulf would transit a route administered by Oman.

Tehran was reportedly seeking payments equivalent to between 5 percent and 7 percent of cargo value, while Oman proposed a 3 percent charge. Washington has rejected any arrangement requiring ships to pay Iran for passage through an open international waterway — a stance consistent with longstanding U.S. policy that the strait must remain freely navigable under international law, a position shared by major importers across Asia and Europe.

Phil Flynn, senior market analyst with Price Futures Group Inc., remarked: "This agreement seems as tenuous as past agreements, and as we know, none of those have held up for very long."

IG analysts wrote in a note: "The main sticking point appears to be whether Iran will continue to insist on a degree of control over the waterway, and whether the U.S. will stand its ground and refuse that outcome."

Iran Vows to Continue Nuclear Program

The prospect of achieving a broader peace agreement appeared increasingly distant on Wednesday. IRGC commander-in-chief Ahmad Vahidi stated: "As long as the United States and Israel possess them, we will continue working on them for our national security…If they disarm, we will disarm."

In response, Israel vowed to prevent Iran from realizing its nuclear ambitions. Trump told media regarding the latest negotiation effort: "If they back out again, they're going to get hit really hard…They know that, they understand that, they can't have a nuclear weapon — it's very simple." Iran has historically maintained that its nuclear activities are peaceful, while the International Atomic Energy Agency has repeatedly sought greater transparency regarding aspects of the program.

U.S. Crude Stockpiles Defy Draw Expectations

Also on Wednesday, despite concerns that the ongoing conflict could tighten global supplies, the U.S. Energy Information Administration reported that crude stockpiles rose by 2.5 million barrels to 407 million barrels last week, contrary to market expectations of a 1.5 million barrel draw. The unexpected build provided a counterbalance to supply-risk premiums embedded in prices, even as refiners approach peak summer demand season.

Source: Ship & Bunker