Oil prices rose on Wednesday amid continued uncertainty over crude supplies from the Middle East, the main production region, as the Strait of Hormuz remains closed.
Brent crude futures rose 0.8% to $95.56 a barrel, after falling 4.6% in the previous session.
U.S. West Texas Intermediate crude rose 0.2% to $91.52, following a sharp 7.9% loss in the previous session.
US President Donald Trump said on Tuesday that talks aimed at ending the war between the United States, Israel and Iran could resume in Pakistan within the next two days, after negotiations collapsed earlier in the week, prompting Washington to impose a blockade on Iranian ports.
These developments have contributed to increased optimism about the possibility of reaching a settlement that would lead to the resumption of crude oil and fuel flows.
Sufroo Sarkar, head of the energy sector team at DBS Bank, explained that markets believe the worst of the conflict between the United States and Iran is over, with new rounds of peace talks expected in the coming days, noting that current hopes outweigh actual developments on the ground.
He added that spot oil prices are still trading at large premiums compared to futures contracts, according to Reuters.
The conflict led to the closure of the Strait of Hormuz, a vital waterway for transporting crude oil and refined products from the Gulf to global markets, particularly in Asia and Europe.
Despite a two-week ceasefire, the flow of traffic through the strait remains uncertain, with sources reporting that the volume of transit represents only a fraction of the approximately 130 ships that used to pass through daily before the outbreak of war.
In the same context, a US official said that a US destroyer prevented two oil tankers from leaving Iran yesterday.
The market is expected to face further supply constraints after two US administration officials said the United States would not renew a 30-day waiver from sanctions on Iranian seaborne oil, which expires this week, and a similar waiver relating to Russian oil is also set to expire early next week.
Markets are awaiting the release of official US oil inventory data from the Energy Information Administration later today at 14:30 GMT.
A Reuters poll had indicated a possible slight increase in U.S. crude oil inventories last week, while distillate and gasoline stocks were expected to decline.
Sources familiar with the American Petroleum Institute's data also reported that crude oil inventories in the United States rose for the third consecutive week.
