U.S. oil prices rose on Thursday as investors assessed prospects for de-escalation in the Middle East, while Iran reviewed a U.S. proposal to end the war despite initially rejecting it. The U.S. sent a 15-point peace plan to Iran, which Tehran is considering despite public denials of direct negotiations. Brent crude futures fell below $100 per barrel on Wednesday after reports of the proposal, but prices rebounded slightly on Thursday. West Texas Intermediate (WTI) crude futures climbed to $91.75 per barrel after a 2.2% drop the previous day.
Market Reactions and Economic Impact
The oil market has entered a state of "backwardation," where near-term prices are higher than future contracts, suggesting traders expect the current price surge to be temporary. Analysts note that while the Strait of Hormuz remains a critical chokepoint, the market anticipates a resolution to the conflict. However, experts warn that even if the war ends, long-term disruptions to global oil supply could persist, forcing countries to diversify energy reserves and build strategic stockpiles.
Diplomatic Developments
The U.S. proposal was delivered through Pakistan, which has offered to mediate talks. Iran has not formally rejected the plan, signaling some internal consideration despite public statements dismissing negotiations. U.S. President Donald Trump has indicated he would escalate pressure on Iran if Tehran refuses to accept the proposal. Meanwhile, global stock markets showed mixed reactions, with Asian indexes falling and European and U.S. markets rallying on hopes of a ceasefire.
Geopolitical and Economic Implications
The war has disrupted 20-25% of the world's oil supply and 20% of liquefied gas passing through the Strait of Hormuz. Analysts predict that even if the conflict ends, countries will prioritize domestic energy reserves and seek alternatives to Middle Eastern oil, potentially keeping prices elevated. The U.S. has not refilled its strategic petroleum reserve to pre-2022 levels, and Europe and Asia may follow suit to mitigate future disruptions.
Divergent Perspectives on Negotiations
While the U.S. and some regional actors express cautious optimism, Iran maintains a hardline stance, rejecting direct talks. The Trump administration's mixed signals—delaying threats while pushing for diplomacy—have added to market volatility. Analysts caution that a sustained drop in oil prices or a softer dollar is unlikely without concrete progress in negotiations.