Oil prices edge lower as Iran says it is open to diplomacy to end the war

• Iran is reviewing US peace proposals that prioritize lifting the naval blockade on Iranian ports and reopening the Strait of Hormuz, though significant disagreements remain between the two countries
• US crude inventories rose by 3 million barrels to 426.4 million barrels last week, contrary to analyst expectations of a 641,000-barrel draw
• Markets also reacted to confusion over potential US diesel export curbs, with Energy Secretary Chris Wright reportedly telling oil industry leaders to prepare for possible restrictions despite earlier denying such plans would work

Oil Prices Dip on Iran Diplomacy Signals, Diesel Export Ban Uncertainty

Oil prices fell Thursday after a 4% gain in the previous session, with Brent crude down 0.9% to $102.13/barrel and WTI declining 0.7% to $91.56/barrel. The retreat followed signals from Iran indicating openness to diplomatic solutions to end the ongoing US-Iran war.

Key Diplomatic Developments:

A senior Iranian official confirmed Tehran is reviewing Washington's response to peace proposals, which prioritize lifting the US naval blockade on Iranian ports and reopening the Strait of Hormuz. Despite ongoing indirect talks, significant gaps remain between the two nations. Iran's security chief Mohsen Rezaei stated the Strait would remain closed until Iran's conditions are met, while US Secretary of State Marco Rubio noted any deal would require extended negotiations and that military options remain available.

Diesel Market Volatility:

Ultra-low-sulfur diesel futures dropped approximately 5% amid conflicting reports about potential US diesel export restrictions. Politico reported the Trump administration was preparing a 90-day diesel ban, which the White House denied. However, Bloomberg sources indicated Energy Secretary Chris Wright warned oil industry leaders to prepare for possible export curbs, despite Wright publicly stating such measures wouldn't work effectively.

Supply Data:

US crude inventories unexpectedly rose by 3 million barrels to 426.4 million barrels last week, according to the EIA, contradicting analyst expectations of a 641,000-barrel draw. Fuel stocks declined during the period.

Other Factors:

US Treasury Secretary Bessent announced a two-month extension of the US-China trade truce, providing additional market context.

Market analysts warn diesel export restrictions could worsen global supply disruptions and fail to alleviate high energy prices.