• Oil futures reversed earlier gains of more than 2% after a Qatari spokesman indicated that talks between Oman and Iran are in an advanced stage.
  • The news eased concerns over potential supply disruptions through the Strait of Hormuz, a key chokepoint for global oil shipments.
  • Market volatility is expected to persist amid ongoing diplomatic efforts and geopolitical tensions.

Diplomatic Signals Weigh on Prices

Brent and US crude futures turned negative on Thursday, erasing earlier gains of more than 2%, after a spokesman for Qatar's Ministry of Foreign Affairs said that talks between Oman and Iran are at an advanced stage. The statement was seen as a sign of easing tensions in the Middle East, which had previously supported oil prices due to fears of supply disruptions in the Strait of Hormuz.

Earlier in the session, prices had rallied on concerns about potential attacks on tankers or infrastructure in the region. The market's sensitivity to diplomatic headlines was on full display, as traders quickly shifted their focus from geopolitical risk to the possibility of increased supply through the strait.

"The market is reacting to the news flow," said a commodities analyst. "Any sign of de-escalation in the region tends to put downward pressure on prices, but the situation remains fluid."

Strait of Hormuz in Focus

About 20% of global oil consumption passes through the Strait of Hormuz, making it a critical chokepoint. The United States and Iran have been engaged in indirect talks, mediated by Qatar and Oman, to de-escalate tensions and revive the nuclear deal. Progress in these negotiations is seen as a key factor that could stabilize oil flows.

However, traders remain cautious. "We've seen headlines before, and they've led to short-term rallies or sell-offs," said another market participant. "But without a clear breakthrough, the market will likely remain volatile."

Volatility Ahead

The latest price swing underscores the market's vulnerability to geopolitical news. Analysts expect continued volatility until there is clearer progress on a broader agreement or a significant shift in supply dynamics. The potential for an escalation remains, as does the possibility of a diplomatic breakthrough.

"Investors are watching every move," said a fund manager. "Any concrete signs of a deal could ease supply fears, but that is far from guaranteed."

Correction: An earlier version of this article incorrectly attributed the statement to a Qatari official. The comment was made by a spokesman for the Ministry of Foreign Affairs.