Crude oil benchmarks were mixed on Wednesday as markets weighed potential diplomatic breakthroughs over the Strait of Hormuz against denials from Iranian state media.
Brent crude futures added 0.1% to $79.44 per barrel, while West Texas Intermediate crude futures eased 0.5% to $75.37/bbl.
"There are suggestions that a deal could be announced as soon as today, although reports that any agreement would be temporary suggest that the market would be wise not to get too carried away," ING analysts said.
Reports indicated that Iran and Oman had progressed discussions on a framework allowing ships to enter the Persian Gulf via an Iranian-controlled route and exit through an Oman-controlled route, potentially tied to the lifting of US blockades on Iranian ports.
US Treasury Secretary Scott Bessent noted that an agreement could materialize imminently, with some vessels already transiting the passage.
However, these sentiments faced strong pushback when Iran's state broadcaster, IRIB, clarified that any bilateral navigation deal with Oman would not immediately result in the reopening of the strait, emphasizing that restrictions would persist until changes occur regarding US actions.
"There is still clearly a wide gap between the US and Iran when it comes to management of the Strait of Hormuz, and, of course, the nuclear issue. Therefore, there is the very real risk that any deal unravels fairly quickly, as we saw with the Memorandum of Understanding," ING added.
Adding further downward pressure on prices, supply-side data from the American Petroleum Institute reported a 2.69-million-barrel increase in US crude inventories for the week ended July 31.
Traders now look ahead to the official US Energy Information Administration petroleum inventory report scheduled for release later on Wednesday to provide clearer direction on domestic supply fundamentals.