Crude futures fell in midday trading on Wednesday as markets balanced signs of progress in US-Iran peace negotiations in Doha with supply disruption fears, while a draw in US crude stockpiles further pressured the market.
Front-month West Texas Intermediate crude futures slipped 1.8% to $68.24 per barrel, while Brent futures dropped 2.3% to $71.27/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.
Soojin Kim, research analyst at MUFG, said oil prices stabilized after recording their sharpest quarterly decline since the pandemic as improving prospects for a lasting US-Iran agreement continued to ease supply concerns.
President Trump said on Wednesday that the US was getting along very well with Iran and that peace negotiations in Qatar went well. Trump 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 an exchange of military strikes between the US and Iran over the weekend, which threatened to jeopardize a 60-day truce between the two countries.
US special envoy Steve Witkoff and Trump's son-in-law, Jared Kushner, held positive talks in Doha to ease tensions in the Middle East 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."
Kim said progress in indirect negotiations has supported a gradual recovery in shipping through the Strait of Hormuz, while Iranian exports have increased following the easing of maritime restrictions.
Meanwhile, tanker traffic through the Hormuz has started to recover, with Vice President J D Vance reportedly saying that oil flows through the strategic waterway had returned to pre-war levels.
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.
OPEC+ countries are set to agree on a further output hike from August, when the cartel meets on Sunday, adding supply at a time of falling prices amid the gradual reopening of the Strait of Hormuz.