Oil prices finished Wednesday with limited movement after both major benchmarks advanced by more than $2 earlier in the session. Brent crude futures settled 3 cents higher, or 0.03%, at $108.82 a barrel. US West Texas Intermediate crude futures declined 67 cents, or 0.7%, to $97.15.

Brent remained near five-month highs after reaching its highest level in five months during the previous session. WTI had also touched a six-month peak before retreating as investors assessed possible mediation efforts involving Iran and Pakistan.

Continued attacks on vessels near the Strait of Hormuz remained a significant source of uncertainty. Dennis Kissler, senior vice president of trading at BOK Financial, said the market had pulled back from overnight highs despite reports of additional ships being struck.

Russia-Ukraine Talks Introduce a Potential Supply Shift

The prospect of renewed US-mediated negotiations between Russia and Ukraine added a counterweight to geopolitical supply concerns. The Kremlin said Russian President Vladimir Putin had agreed to resume peace talks as soon as the following month after meeting US envoy Steve Witkoff.

Potential progress toward an agreement could ease some pressure on global diesel supplies, which have contributed to recent bullish sentiment in crude markets. However, the outcome and timing of any agreement remain uncertain.

For oil markets, the implications extend beyond crude production. A potential easing of restrictions and disruptions affecting refined fuel supplies could change the balance between crude demand, refinery operations and diesel availability.

US-Iran Standoff Keeps Shipping Risks in Focus

Iranian officials continued to reject the prospect of dialogue under current US pressure. Foreign Minister Abbas Araqchi said Iran was prepared to defend itself, while President Masoud Pezeshkian argued that the United States could not expect negotiations while maintaining a blockade and issuing threats.

Shipping data highlighted the scale of the disruption. Kpler recorded at least 18 vessel attacks over the preceding two weeks. LSEG analysts also warned that attacks attributed to Iran were extending beyond the Strait of Hormuz into the Gulf of Oman, threatening crude loadings and ship-to-ship transfers across the region.

Iran-aligned Houthis also claimed responsibility for attacks involving a Saudi Aramco site in Yanbu, the Shaybah oilfield and airports in Riyadh and Abha.

Meanwhile, the US Department of Energy said the administration was offering to lend up to nearly one-third of the country’s one-million-barrel emergency heating oil reserve in an effort to address fuel shortages and contain prices.

US Crude Draw Contrasts With Rising Distillate Inventories

The latest US inventory report provided another mixed signal. According to the Energy Information Administration, commercial crude inventories declined by 3.06 million barrels to 412.5 million barrels in the latest week. Analysts had expected a draw of 820,000 barrels.

Distillate inventories, which include diesel and heating oil, moved in the opposite direction, increasing by 1.68 million barrels to 104.3 million barrels. Analysts had forecast a decline of 1.16 million barrels.

The contrasting figures suggest that tighter crude inventories have not yet translated into a corresponding reduction in distillate stocks. US officials also said the Energy Department was working with refiners internationally to increase fuel production.

What Investors Should Watch Next

Oil prices remain caught between immediate supply risks and the possibility that diplomatic progress could reduce future disruptions. Further attacks on commercial shipping, developments in US-Iran relations and the security of Gulf export routes will remain important factors for near-term price direction.

Investors will also monitor subsequent US inventory reports and efforts to expand refined fuel output. The balance between crude availability, diesel supplies and geopolitical risk is likely to remain central to market movements.