KEY POINTS
- Brent crude recovered to $103.60 per barrel, while US West Texas Intermediate traded at $95.98 after a sharp decline on Tuesday.
- Prices had fallen to a four-week low following reports that Iran could be open to discussions on previously non-negotiable issues.
- Energy consultancies Rystad Energy and Vortexa warned that Gulf oil supply may not return to normal quickly, even if the war ends.
- October oil exports through the Strait of Hormuz averaged 17.1 million barrels daily, down from 18.9 million barrels in September.
MAIN STORY
Crude oil prices rebounded above $100 per barrel on Wednesday as traders reassessed the prospects for a recovery in Middle East oil supplies, shifting their attention from the US midterm elections to developments in the war involving the United States and Iran.
Brent crude was trading at $103.60 per barrel at the time of writing, while West Texas Intermediate (WTI) stood at $95.98. The recovery followed a sharp decline on Tuesday, when reports that Iran might be willing to discuss previously non-negotiable issues raised expectations of progress towards ending the conflict.
However, concerns about the speed at which oil exports could recover have limited optimism. Two energy consultancies have warned that even an agreement between Washington and Tehran may not quickly restore normal crude flows from the Persian Gulf.
Rystad Energy said it did not expect oil shipments from the region to return to normal levels anytime soon, even if the two countries reached an agreement to end the war. The consultancy also questioned whether the competing priorities in the negotiations could be resolved within the next year.
Its assessment suggests that a diplomatic breakthrough would not automatically remove the supply disruptions and uncertainty already affecting the oil market.
Data from Vortexa also points to weaker exports through the Strait of Hormuz, a critical route for energy shipments from the Gulf. Combined exports of crude oil, condensates and refined fuels through the strait averaged 17.1 million barrels per day in October, compared with 18.9 million barrels per day in September.
The figures challenge reports suggesting that Gulf oil exports had returned to pre-war levels or exceeded them. They also indicate that the recovery in physical oil supply remains uncertain despite recent diplomatic signals.
THE ISSUES
The market is balancing two competing developments: the possibility of an agreement that could reduce supply disruptions and the continuing risk that oil flows will remain constrained even after diplomatic progress.
The uncertainty has also made it difficult for traders to establish a clear direction for prices. Phillip Nova analyst Priyanka Sachdeva said conflicting signals from US President Donald Trump, including continued military strikes alongside statements playing down further escalation, had weakened market conviction.
ING’s commodity team similarly warned that it was too early to assume the war would end. The team said oil prices continued to carry a substantial risk premium because of uncertainty surrounding supply from the Persian Gulf.
For oil-importing countries such as Nigeria, sustained price volatility matters because international crude prices influence fuel-market expectations and government revenue projections. However, the supplied information does not establish how the latest price movement will affect domestic fuel prices or Nigeria’s oil receipts.
WHAT’S BEING SAID
“We consider it unlikely that all these points of contention can be resolved within the coming year.” – Rystad Energy.
“President Trump’s conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction.” – Priyanka Sachdeva, analyst at Phillip Nova, as quoted by Reuters.
“The market still has a large risk premium baked in, particularly given the strong oil flows from the Persian Gulf.” – ING’s commodity team.
WHAT’S NEXT
Traders will continue to monitor diplomatic developments between the United States and Iran, particularly whether discussions can produce an agreement that allows oil shipments through the Persian Gulf to recover.
The volume of exports passing through the Strait of Hormuz will also remain an important indicator of whether the region’s physical supply is returning to normal. Until there is clearer evidence of a sustained recovery, expectations of a quick return to pre-war oil flows are likely to remain uncertain.
BOTTOM LINE
Oil prices have recovered from their four-week low, but the rebound reflects more than changing expectations about the war. With export data still showing weaker flows through the Strait of Hormuz, the market is not yet convinced that diplomatic progress will translate into a rapid return of Gulf oil supplies.
