Oil markets ended Thursday in mixed territory after another volatile trading session dominated by uncertainty surrounding a possible extension of the ceasefire between the United States and Iran. Traders struggled to interpret conflicting reports regarding diplomatic progress, underscoring how geopolitical developments continue to overshadow traditional supply-and-demand fundamentals across global energy markets.

Brent crude futures for July delivery settled down 0.6% at $93.71 per barrel, while U.S. West Texas Intermediate crude edged 0.3% higher to close near $88.90 per barrel. The more actively traded August Brent contract remained slightly positive late in the session, reflecting persistent uncertainty about near-term supply conditions.

The market’s sharp intraday swings highlighted growing investor sensitivity to every headline tied to the three-month Middle East conflict and the future of the Strait of Hormuz, one of the world’s most critical oil shipping routes.

Ceasefire Negotiations Continue Driving Energy Markets

According to multiple reports, negotiators reached a preliminary agreement to extend the fragile ceasefire between Washington and Tehran for an additional 60 days. However, the arrangement reportedly still requires approval from U.S. President Donald Trump, while Iranian officials cautioned that the memorandum of understanding has not yet been finalized.

The uncertainty created a highly unstable trading environment, with both Brent and WTI crude initially surging more than 2% earlier in the day after Iran’s Revolutionary Guards claimed responsibility for targeting a U.S. military base following recent American strikes near Bandar Abbas.

Despite occasional optimism surrounding diplomacy, shipping traffic through the Strait of Hormuz remains only a fraction of normal pre-war levels. Energy traders continue closely monitoring whether any eventual agreement would fully reopen the strategic corridor or merely reduce military escalation temporarily.

Analysts noted that oil prices are currently reacting asymmetrically to geopolitical developments. Bullish military headlines are producing moderate gains, while even small signs of diplomatic progress are triggering steep selloffs as traders aggressively price in the possibility of restored energy flows.

Inventory Declines Fail to Lift Prices Significantly

Normally, falling U.S. crude inventories would provide substantial support for oil prices. Government data released Thursday showed American crude stockpiles declined by 3.3 million barrels last week, marking the sixth consecutive weekly drawdown.

Gasoline and distillate fuel inventories also declined, reinforcing evidence that physical supply conditions remain tight globally.

However, the inventory data had only a limited impact on prices because geopolitical negotiations continue dominating trader sentiment. UBS analyst Giovanni Staunovo noted that the market remains overwhelmingly focused on developments in the Middle East rather than underlying supply fundamentals.

The muted reaction to shrinking inventories reflects investor belief that a successful reopening of Hormuz could rapidly restore millions of barrels of disrupted supply back into global markets.

Volatility Likely to Persist Across Energy Markets

Oil market volatility is expected to remain elevated as long as negotiations between Washington and Tehran continue without a definitive resolution.

While some investors are increasingly optimistic that both sides ultimately want to avoid a prolonged economic and military escalation, significant political and strategic disagreements remain unresolved, particularly surrounding maritime control, sanctions relief, and Iran’s nuclear program.

For global markets, the stakes remain exceptionally high. Sustained disruptions to Hormuz continue fueling inflation risks worldwide and complicating monetary policy decisions for central banks already facing elevated price pressures.

Looking ahead, energy traders will remain highly reactive to military developments, diplomatic announcements, and shipping activity data from the Gulf region. Until clearer evidence emerges that energy flows can normalize safely, oil markets are likely to remain vulnerable to sharp price swings in both directions.