Oil prices edged lower on Thursday, extending sharp losses from earlier this week as investors weighed signs of progress toward restoring shipping through the Strait of Hormuz against lingering geopolitical risks and a surprise build in U.S. crude inventories.

As of 21:02 ET (01:02 GMT), Brent Oil Futures expiring in October fell 0.2% to $79.28 per barrel, while West Texas Intermediate (WTI) crude futures slipped 0.4% to $74.90 per barrel.

Both contracts ended little changed on Wednesday, but remained on track for weekly losses of more than 10%.

Market sentiment improved after Iran said it had reached an agreement with Oman on the coordinates of a proposed shipping route through the Strait of Hormuz, a vital waterway that handles roughly a fifth of global oil and LNG trade.

However, traders remained cautious as the agreement does not amount to a full reopening of the strait, with negotiations over cargo fees, inspections and broader security arrangements still unresolved.

U.S. President Donald Trump said at a rally in Las Vegas on Wednesday that Washington was holding talks with Tehran and that he would "see what happens" in the ongoing negotiations.

However, Iran has publicly denied that peace talks with Washington were underway.

Still, the prospect of increased tanker movements through Hormuz eased some fears of prolonged supply disruptions that had driven oil prices sharply higher in recent weeks.

Analysts said the geopolitical risk premium has not disappeared, given repeated setbacks in negotiations and uncertainty over whether any agreement can be fully implemented.

Further limiting gains, U.S. government data showed crude oil inventories unexpectedly rose by about 2.5 million barrels last week, compared with market expectations for a 1.5 million barrels drawdown, suggesting softer near-term demand.

Stockpiles at the Cushing, Oklahoma delivery hub also increased, adding pressure to prices.

Meanwhile, security concerns elsewhere in the region remained elevated. Houthi attacks on shipping in the Red Sea, continued fighting affecting Russian and Ukrainian maritime trade, and disruptions to Kazakhstan’s main export route highlighted that risks to global energy supplies remain despite optimism surrounding Hormuz.

Source: Investing.com

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