Oil Jumps Over 2% as Iran Reviews U.S. Proposal Amid Persistent Market Volatility

Oil prices rebounded by more than 2% in Asian trading on Thursday, as markets reacted to conflicting signals surrounding potential de-escalation in the Middle East. The gains follow a sharp decline in the previous session, underscoring the heightened volatility driven by geopolitical uncertainty.

As of 02:09 ET (00:31 GMT), Brent crude futures for May delivery rose 2.3% to $104.54 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 2.3% to $92.32 per barrel. Both benchmarks had dropped more than 2% on Wednesday, as initial optimism over diplomatic progress briefly eased supply concerns.

The latest rebound comes as Iran reviews a U.S.-backed proposal aimed at ending the ongoing conflict. While Tehran has not formally accepted the plan, it has avoided outright rejection, fueling cautious hopes of a possible diplomatic breakthrough.

However, uncertainty remains elevated. Iranian officials have denied engaging in direct negotiations with Washington and emphasized that significant differences still exist. This mixed messaging continues to keep traders cautious and contributes to ongoing price swings.

Oil markets have been highly volatile in recent weeks, with the conflict disrupting energy flows from the Gulf region—one of the most critical sources of global crude supply. Earlier this month, Brent surged above $119 per barrel amid fears of supply disruptions.

The Strait of Hormuz remains a key focal point for investors, as it handles roughly one-fifth of global oil shipments. Any escalation in the area could have immediate implications for global supply and pricing.

Despite the rebound, bearish signals from the United States have limited upside momentum. Data from the U.S. Energy Information Administration (EIA) showed an unexpected increase in crude inventories, pointing to softer refinery demand.

U.S. crude stockpiles rose by 6.93 million barrels last week, significantly above expectations for a 1.3 million-barrel draw. Distillate inventories also increased by 3.03 million barrels, defying forecasts for a decline and signaling weak demand for diesel and heating fuels.

Gasoline inventories fell by 2.59 million barrels, although the draw was smaller compared to the previous week’s sharper decline.

Overall, oil markets remain caught between geopolitical developments and weakening demand indicators, with investors closely monitoring both diplomatic signals and inventory data for near-term direction.