Oil prices slipped modestly in choppy trading on Wednesday as traders balanced diplomatic efforts to restore shipping through the Strait of Hormuz against fresh risks to global supply.
Brent crude settled below $88 a barrel after swinging between gains and losses, while West Texas Intermediate (WTI) held steady near $82.
Oman and Iran are pushing for a broader agreement on managing the Strait of Hormuz. Iranian military officials indicated the two sides have reached a revenue-sharing deal on the vital waterway, though Tehran has repeatedly stressed that any navigation agreement does not imply the strait will reopen immediately.
Oil prices moved higher intraday on reports that Russian President Vladimir Putin is planning to escalate military operations in Ukraine, having concluded that peace negotiations have reached a dead end. Recent Ukrainian strikes on refineries and ports have tightened fuel markets and prevented Moscow from redirecting crude for export, further constraining a market already disrupted by the Iran conflict.
Diesel has been hit particularly hard, with New York diesel futures closing higher and prices up more than double so far this year. Meanwhile, data shows U.S. domestic diesel supplies have fallen to their lowest level for this time of year on record.
However, crude appears to still be flowing out of the Persian Gulf. U.S. President Donald Trump claimed that 10 million barrels of oil moved through the Strait of Hormuz on Tuesday, reinforcing hopes that traffic through the waterway may be increasing after months of disruption. Satellite imagery also appears to show Saudi Arabia boosting oil loadings in the Persian Gulf, suggesting the kingdom is finding alternative routes to export crude amid threats from Yemen's Houthi rebels to its Red Sea shipments.
October Brent crude futures fell 0.8% to settle at $87.84 a barrel, while October WTI crude declined 0.1% to close at $82.23.
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