Brent and WTI crude futures fell as diplomatic progress on the Strait of Hormuz offset a smaller-than-expected U.S. inventory increase.
Oil prices declined on Wednesday as investors weighed progress in talks between Iran and Oman over the Strait of Hormuz, a key chokepoint for global crude shipments. Brent crude futures dropped 0.8% to $87.87 a barrel, while West Texas Intermediate fell 0.58% to $81.88, both hitting session lows earlier in the day.
The pullback followed optimism over potential easing of tensions in the Strait of Hormuz, which had previously stoked supply disruption fears. U.S. crude inventories rose by 95,000 barrels last week, below the 597,000-barrel increase analysts had expected, according to the Energy Information Administration.
Analysts noted the market had shifted from pricing in prolonged disruption risks to a more optimistic outlook, with a potential agreement seen reducing geopolitical premiums. Iran and Oman are reportedly finalizing details to restore traffic through the strait.