Oil prices edged higher on Thursday, as investors monitored peace talks between the United States and Iran, while supply tightness and U.S. inventory drawdowns provided some support.
The recent tensions have resulted in a significant increase in oil prices, with Brent crude futures rising 40 cents, or 0.4%, to $105.42 a barrel by 0809 GMT.
Despite the rise in oil prices, analysts remain cautious due to the ongoing conflict between the US and Iran, which has led to supply losses in key Middle Eastern producing regions.
The war has forced countries to tap their commercial and strategic inventories at a rapid rate, raising concerns about draining them.
In response to the US and Israeli attacks that started the war on February 28, Iran effectively closed the Strait of Hormuz, which remains mostly closed.
Most of the fighting has stopped since an April ceasefire, but while Iran is limiting traffic through Hormuz, the U.S. has blockaded its coastline.
The drawdown in oil inventories will make it difficult for oil prices to remain low, as countries seek to replenish their supplies and mitigate supply risks.
With the Strait of Hormuz blocked, global refined-product and onshore crude inventories are expected to fall below their lowest levels for this time of year in the past five years by late May and June.
The recent developments have highlighted the importance of the Strait of Hormuz as a critical chokepoint in global energy flows, with oil prices likely to remain volatile in the coming weeks.
The recent escalation of tensions between the US and Iran has led to a rebound in oil prices as traders seek to mitigate supply risks.
