Oil prices stable as Hormuz shipping constraints counter hopes for US-Iran talks

Oil prices were broadly stable after steep falls in the previous session as shipping through the Strait of Hormuz remained constrained, countering expectations of U.S.-Iran talks aimed at ending the war in the Middle East.

Forty-five days after Iran's Revolutionary Guards declared the strait closed, effectively shutting in about 20% of global oil and liquefied natural gas shipments, transit through the waterway remains at only a fraction of the 130-plus daily crossings seen before the war, sources said on Tuesday.

The U.S. has enacted a blockade of shipping leaving Iranian ports that its military said on Wednesday has completely halted trade going in and out of the country by sea.

Brent crude futures were up 49 cents, or 0.5%, at $95.28 a barrel at 1315 GMT, after falling around 5% in the previous session. U.S. West Texas Intermediate crude was up 9 cents, or 0.1%, at $91.37. The contract had dropped 8% the session before.

"I think you're going to be watching an amazing two days ahead," U.S. President Donald Trump told ABC News reporter Jonathan Karl, according to a post by the reporter on X, adding he did not think it would be necessary to extend a two-week ceasefire that expires next week.

Stock indices rallied on Tuesday on increasing optimism about the prospects for a resolution of the conflict. Trump said talks with Tehran could resume this week after ending over the weekend without any agreement.

Refiners are desperately seeking alternative crude supply, pushing up the premiums they are willing to pay for oil from areas such as the U.S. Gulf Coast and North Sea. A cargo of WTI Midland for delivery to Rotterdam traded at a record premium of $22.80 a barrel above benchmark European prices on Tuesday.

"The Strait of Hormuz is not Trump's alone to reopen," said SEB analyst Ole Hvalbye. "Iran has its own calculus, and the regime may find it strategically useful to keep flows restricted even after any peace deal."

The market stands to lose some access to further supply after two U.S. administration officials told Reuters on Tuesday the U.S. will not renew a 30-day waiver of sanctions on Iranian oil at sea that expires this week, and quietly let a similar sanctions waiver for Russian oil expire over the weekend.

Later in the day, markets will be watching for official U.S. inventory data from the Energy Information Administration, due at 10:30 a.m. ET (1430 GMT).

U.S. crude oil stockpiles were expected to have risen slightly last week, while distillate and gasoline inventories likely fell, a Reuters poll showed. Market sources familiar with American Petroleum Institute figures said on Tuesday U.S. crude oil inventories jumped for a third straight week. 

(Reporting by Stephanie Kelly in London, Katya Golubkova in Tokyo and Emily Chow in Singapore; Editing by Christian Schmollinger, Kevin Buckland, Joe Bavier, Chizu Nomiyama, Peter Graff)