Oil prices on Wednesday eased after US President Donald Trump asserted that the war with Iran would end 'very quickly'. Despite this, investors remained cautious amid uncertainty over peace talks and continued disruption to Middle East oil supplies.
Brent crude futures fell 45 cents (0.4%) to $110.83 a barrel, while US West Texas Intermediate crude slipped 27 cents (0.3%) to $103.88.
Both benchmarks had already dropped nearly $1 on Tuesday after US Vice President JD Vance said Washington and Tehran had made progress in negotiations and neither side wanted military hostilities to resume, Reuters reported.
Analysts said markets were closely tracking whether the United States and Iran could reach a workable peace agreement amid shifting signals from Washington.
"Investors are keen to gauge whether Washington and Tehran can actually find common ground and reach a peace agreement, with the US stance shifting daily," Toshitaka Tazawa of Fujitomi Securities said.
He, however, warned that prices could remain elevated because of fears of renewed military action and prolonged supply disruptions.
"Oil prices are likely to remain elevated given the possibility of renewed US attacks on Iran and expectations that, even if a peace deal is reached, crude supply will not quickly return to pre-war levels," Tazawa said.
Despite Trump's latest claim that the conflict could end quickly, the US president had earlier warned that Washington could strike Iran again if talks failed.
Trump on Tuesday said that Iran's leaders were 'begging for a deal' and warned that fresh US military action could happen within days if no agreement was reached.
The ongoing conflict has also severely affected the Strait of Hormuz, a critical route that normally carries around one-fifth of global oil supplies, according to the International Energy Agency.
Meanwhile, financial services firm Citigroup projected that Brent crude prices could rise to $120 per barrel in the near term, warning that markets were underestimating the risk of prolonged supply disruptions.
The supply concerns were further reflected in declining US crude inventories. According to market sources citing American Petroleum Institute data, US crude stockpiles fell for a fifth consecutive week last week, while fuel inventories also declined.
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Read MoreThe TOI Business Desk is a vigilant and dedicated team of journalists committed to delivering the latest and most relevant business news from around the world to readers of The Times of India. The primary focus of the TOI Business Desk is to keep a watchful eye on the global business landscape, covering a wide spectrum of industries, markets, economic trends, in-depth analysis, exclusive reports and breaking stories that impact businesses and economies. With a mission to provide valuable insights and updates, the desk ensures that TOI readers are well-informed about the ever-changing and dynamic world of commerce and can navigate the complexities of the business world.
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