Oil rebounds after falling 6% on Iran peace talks

Oil prices recovered on Thursday morning after dropping 6 percent on Wednesday following US President Donald Trump’s statement that peace talks with Iran were in the “final stages”.

Brent crude futures rose 0.70 percent to $105.83 a barrel by 0400 GMT, while US West Texas Intermediate futures gained 0.80 percent to $99.04.

Trump threatened further attacks against Iran if it did not agree to a peace deal.

Iran warned of retaliation if attacked. Its Islamic Revolutionary Guard Corps (IRGC) coordinated the transit of 26 vessels through the Strait of Hormuz in the past 24 hours, Iran’s state-affiliated ISNA news agency reported.

Tehran also announced the formation of the Persian Gulf Strait Authority, turning the Strait into a “controlled maritime zone”.

The waterway carried nearly 20 percent of global oil and gas consumption, but has been all but closed since February 28.

Crude price rises were also supported by the US withdrawing 10 million barrels of oil from its strategic petroleum reserve last week, the biggest drawdown on record.

“The drawdown in oil inventories will make it difficult for oil prices to remain low,” Reuters reported Mingyu Gao, chief researcher for energy and chemicals at China Futures, as saying.

Meanwhile, Dubai and Abu Dhabi stock exchanges closed lower on Wednesday.

The Saudi stock exchange closed flat with Aramco shares down 0.4 percent.

• UAE’s Al Jaber says oil supply will take months to recover
• Frank Kane: The Strait of Hormuz may never truly reopen
• Demand for oil severely outstrips supply, IEA warns