Oil prices were mixed on Wednesday as the International Energy Agency and OPEC released monthly reports detailing the impact of the Middle East conflict.
Front-month Murban crude futures eased by 0.5% to $105.46 per barrel, while Brent futures were up 0.1 % to $107.90/bbl.
Strategists noted that markets are still digesting President Trump's recent rejection of Tehran's counteroffer and his warning that a regional ceasefire is on "massive life support."
The breakdown in negotiations is largely attributed to Iran's refusal to cede control over its nuclear program and its insistence on maintaining authority over traffic through the Strait of Hormuz.
"The breakdown in negotiations suggests an extended disruption to oil supplies from the Persian Gulf is likely," ANZ analysts said.
On the ground, the impact of the US naval blockade is becoming starkly visible.
Satellite imagery obtained by Bloomberg suggests that shipments from Iran's primary export terminals have reached a virtual standstill over the last several days, a significant shift for a nation that had managed to maintain exports of roughly 1.8 million barrels per day despite the war.
This supply chokehold is rapidly depleting the global inventory buffer.
ANZ estimates that global crude stocks fell by nearly 200 million barrels in April alone, a staggering daily rate of 6.6 mb/d.
The IEA's May oil market report, confirmed the severity of the crisis, revealing that 14.4 million barrels per day of Gulf production is currently shut in.
Concurrently, OPEC revised its 2026 global demand growth forecast to 1.2 mb/d from last month's 1.4 mb/d.
"If Hormuz remains shut, the second quarter of 2026 will see the largest quarterly crude inventory drawdown in history at 6.5mb/d," ANZ noted.
Adding to the bullish fundamental backdrop, the American Petroleum Institute reported late Tuesday that US crude inventories decreased by 2.19 million barrels for the week ended May 8.
The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.