NEW YORK: Oil prices were mixed on Wednesday, with Brent settling up slightly but the US contract edging lower, as investors weighed revived expectations of a de-escalation in US-Iran hostilities that could restore shipping traffic in the Strait of Hormuz and oil flows in the Middle East.
Brent crude futures settled up 9 cents, or 0.11%, at US$79.45 a barrel. US West Texas Intermediate futures fell 55 cents, or 0.73%, to US$75.22.
US President Donald Trump said there was an "all-day negotiation" on Tuesday with Iran, characterizing the talks positively while also threatening to hit Tehran "really hard" if a deal were not reached.
Iran denied that peace talks were under way. Its Foreign Ministry said on Wednesday that Iran and Oman have reached an understanding on how to manage the Strait of Hormuz, and a joint announcement is being finalised.
Before the war started at the end of February, about 20% of the world's oil and liquefied natural gas passed through the strait.
The market remained optimistic but cautious, said Phil Flynn, senior analyst with Price Futures Group. "This agreement seems as tenuous as past agreements, and as we know, none of those have held up for very long."
Reports of progress in efforts to end the war drove prices down 5% on Tuesday, with Brent closing below US$80 a barrel for the first time since July 13.
"The main sticking point appears to be whether Iran will continue to insist on a degree of control over the waterway, and whether the US will stand its ground and refuse that outcome," IG analysts said in a note.
A build in US crude inventories, as refineries eased their processing, slightly pressured prices, as did a slight rise in imports.
Crude stockpiles rose by 2.5 million barrels to 407 million barrels last week, data from the Energy Information Administration showed on Wednesday. Analysts had expected a draw of 1.5 million barrels.
The US oil benchmark was under more pressure as oil inventories at the Cushing, Oklahoma, delivery hub rose more than the market expected last week, said Andrew Lipow, president of Lipow Oil Associates.
The losses were limited by shipping risks in the Red Sea after Yemen's Iran-aligned Houthi rebels said on Wednesday they had attacked a Saudi oil tanker off Yanbu, a port for Saudi crude oil exports.
Apart from disruption in the Gulf, a surge in attacks on Russian and Ukrainian ships, ports and export terminals in the Black Sea is disrupting global commodity supplies.
Disruption has spread to the Caspian Pipeline Consortium, the main export route for Kazakh crude oil, which has repeatedly suspended operations this week because of safety concerns and a lack of tankers, numerous trading sources said.
Elsewhere, China further relaxed controls on fuel exports in August. — Reuters
