Oil rises after Trump rules out reviving Iran deal

Oil prices snapped a multi-session losing streak on Thursday after reports emerged that the Trump administration has repeatedly told mediators it will not return to the terms of the June memorandum of understanding with Iran, dimming prospects for a near-term reopening of the Strait of Hormuz and prompting traders to price in a longer stretch of restricted Gulf energy flows.

Brent crude settled up around 2%, while West Texas Intermediate gained roughly 1.5%, according to Reuters. Both benchmarks had fallen earlier in the session on optimism surrounding diplomatic efforts, with Brent dipping as low as $86.22 and WTI touching $80.65 before reversing course.reuters

Trump Rules Out Return to June Deal

The rally was driven by a Wall Street Journal report that the White House has no interest in reverting to the ceasefire framework reached with Tehran in June, which later unraveled. Trump told reporters the United States is focused on economic pressure rather than renewed diplomacy, reiterating that "all options remain on the table". The stance followed Monday's rollout of what Washington called its toughest-ever sanctions against Iran, with Treasury Secretary Scott Bessent suggesting the measures could reduce the need for further military action.investinglive

Iran responded defiantly. A senior security official warned Tehran would target U.S. military and economic interests — including shipping, energy, insurance, and financial assets — if Washington escalated further. Tehran also threatened to blacklist vessels breaching its newly imposed Hormuz transit rules.reuters+1

Diplomatic Efforts Continue, but Gap Remains Wide

Qatar's prime minister traveled to Tehran on Thursday to try to relaunch negotiations ahead of the conflict's six-month anniversary. Separately, Iran and Oman are working to finalize an arrangement for jointly managing the strait, a senior Iranian source said.shafaq+1

The waterway handled roughly one-fifth of global daily oil and liquefied natural gas supplies before the conflict began on February 28. Vessel traffic rose slightly on Wednesday to around 10 transits, up from recent lows but still below the 10-day average of about 15. "As long as the risk to supply remains, some degree of war premium can continue to be priced into oil," said Priyanka Sachdeva of Phillip Nova.reuters+2

Diesel Crunch Deepens

The conflict's toll on refining capacity is compounding crude market pressures. Kuwait's Al-Zour refinery, struck by Iranian drones in May, has restarted all three crude units at about 60% capacity. Meanwhile, U.S. distillate inventories fell 2.2 million barrels in the week ending August 21 to 103.4 million barrels — the lowest level ever recorded for this time of year, according to ANZ strategist Daniel Hynes. UBS analyst Giovanni Staunovo warned that strategic petroleum reserve releases that have helped offset disruptions "will end soon, translating into faster falling commodity inventories if there is no improvement".energyupdate+3