LONDON: Oil prices eased on Wednesday as investors assessed the outlook for U.S.-Iran peace talks after the U.S. announced an extension of the ceasefire.
Brent crude futures were down 32 cents, or 0.3%, at $98.16 a barrel at 0721 GMT, after touching $99.38 per barrel earlier in the session. West Texas Intermediate futures were down 53 cents, or 0.6%, to $89.14 after climbing as high as $90.71 at the open.
Both benchmark contracts rose about 3% on Tuesday. U.S. President Donald Trump said he would indefinitely extend the ceasefire with Iran, hours before its expiry, to allow talks to continue to end a war that has killed thousands and shaken the global economy.
DOUBTS OVER WHETHER ISRAEL AND IRAN WILL AGREE
The announcement appeared to be unilateral, and it was not immediately clear whether Iran, or U.S. ally Israel, would agree to extend the truce, which began two weeks ago.
Trump also said the U.S. Navy would maintain its blockade of Iran's ports and shore, which Iranian leaders have called an act of war.
There was no immediate comment from Iran's most senior leaders on Trump's ceasefire extension. Tasnim News Agency, affiliated with Iran's Revolutionary Guards, said Iran had not asked for the extension and repeated its position that it would break the U.S. blockade by force.
The Strait of Hormuz, until the Iran war began at the end of February, was the channel for about 20% of global oil and liquefied natural gas supplies. It remained broadly halted with only three ships passing along the waterway in the last 24 hours, shipping data showed.
In Europe, Ukrainian President Volodymyr Zelenskiy said the Druzhba oil pipeline pumping Russian oil is ready to resume operation. Three industry sources, however, said Russia is set to stop oil exports from Kazakhstan to Germany via the Druzhba pipeline starting on May 1.
Later on Wednesday, the U.S. Energy Information Administration will publish inventory data. Crude oil inventory fell by 4.5 million barrels last week, while gasoline and distillate stocks also declined, market sources said, citing American Petroleum Institute figures. Analysts estimated a 1.2 million-barrel draw of crude for the week ended April 17.
"If the EIA confirms the draws and U.S. weekly exports of both crude oil and refined products remain robust, this will be taken as confirmation that consumers in Europe and the Far East are scrambling to secure oil supplies wherever, whenever, and however they can," PVM analysts said. - Reuters
