Oil prices extend losses on expectations of eased Middle East supply woes

Oil prices declined for the fourth and fifth consecutive day, with Brent crude futures and West Texas Intermediate futures both dropping 0.7% on Thursday. This downward trend is driven by expectations that diplomatic efforts between Iran and Qatar could lead to the reopening of the Strait of Hormuz, a vital waterway for global energy transport.

Senior Iranian sources indicated that an agreement to control the Strait of Hormuz is being finalized. This strait accounts for approximately one-fifth of global oil and natural gas consumption. Its closure in response to the U.S.-Israeli war on Iran had previously reduced oil flows to about a quarter of their pre-war level, according to ship-tracking data.

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Crude oil edged lower as the prospect of the Strait of Hormuz reopening improved amid ongoing talks.

Qatar's prime minister is set to visit Iran to resume diplomatic talks aimed at ending the nearly six-month conflict. While the U.S. has paused attacks on Iran and is increasing economic pressure, significant gaps remain in demands to end the fighting. Iran has previously targeted shipping in the Gulf and the strait to assert control.

Despite the potential easing of supply disruptions from the Strait of Hormuz, concerns over diesel shortages persist. The Middle East war has damaged refineries, and Ukraine has targeted Russian refineries, impacting exports from a major global diesel supplier. U.S. distillate stockpiles, including diesel and heating oil, have fallen to their lowest recorded level for this time of year, according to the Energy Information Administration.

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concerns over shortages in the oil market persist.