Crude oil futures settled lower in after-hours trading on Wednesday after President Trump said talks between the US and Iran were progressing well, easing concerns over potential supply disruptions, while a draw in US crude stockpiles further pressured the market.
Front-month West Texas Intermediate crude futures fell 2.1% to $68.02 per barrel, while Brent futures dropped 2.5% to $71.16/bbl.
US commercial crude oil inventories decreased by 3.8 million barrels to 408.4 mmbbls in the week ended June 26, the Energy Information Administration said in its weekly report on Wednesday. The decline is less than Macquarie's forecast of a 5.5-mmbbl draw for the week ending June 26.
On Wednesday, Trump said that the US was getting along very well with Iran and that recent meetings in Qatar went well. The US President told reporters that the two sides had very constructive meetings, "and we'll see how it develops," adding that crude prices have come down significantly, now at about $68/bbl.
The technical talks in Qatar come after tit-for-tat military strikes between the US and Iran over the weekend, which threatened to jeopardize a 60-day truce between the two countries.
Soojin Kim, research analyst at MUFG, said progress in indirect negotiations has supported a gradual recovery in shipping via the Hormuz, while Iranian exports have increased following the easing of maritime restrictions.
US special envoy Steve Witkoff and Trump's son-in-law, Jared Kushner, held positive talks in Doha to ease the Middle East conflict and held technical talks as the two sides seek to reach an agreement on the flow of shipping through the Strait of Hormuz.
Iran's Deputy Foreign Minister Kazem Gharibabadi led a delegation of representatives from Iran's foreign ministry, central bank and agriculture ministry, meeting Qatar's prime minister, Sheikh Mohammed bin Abdulrahman Al Thani and holding talks with mediators, according to local media.
Gharibabadi reportedly said that working groups for the follow-up of the MoU's implementation and for negotiations towards a final agreement have been set up, "but no talks have yet taken place within these frameworks."
Meanwhile, market sentiment is being bolstered by reports that tanker traffic through the Strait of Hormuz has begun to recover. US Vice President J D Vance reportedly said that oil flows through the strategic waterway have returned to pre-war levels.
ING strategists said that the crude market continues to take an optimistic view of a supply recovery from the Persian Gulf, despite recent flare-ups between the US and Iran.
The Strait recorded 34 verified crossings on June 30, according to MarineTraffic, with traffic evenly balanced at 17 vessels in each direction.
However, route visibility remained "fragmented," with vessels using Iranian, Omani, International Maritime Organization, and dark or unknown routes, according to MarineTraffic.