Crude prices steadied after three consecutive sessions of sharp gains, as markets weighed ongoing Middle East tension against hints that both Washington and Tehran are seeking a path toward de-escalation.

President Donald Trump told reporters at the White House on Monday that the latest round of U.S. strikes against Iran would not last long. Trump stated that Tehran is attempting to rebuild radar systems, missile infrastructure, and mine-laying capabilities, describing Friday's U.S. attack as "very powerful" for destroying equipment Iran had sought to deploy along the Strait of Hormuz coastline. He added that Washington stands ready to strike again if necessary.

Trump also asserted that the United States has maintained and will continue to maintain control over the Strait of Hormuz, noting that "we have a massive number of ships carrying millions of barrels of oil in and out every day, and overall things are going smoothly. Occasionally a drone gets shot down, but we have a firm grip on the situation."

WTI crude, which had climbed roughly 9% over the previous three sessions, found support near $91 a barrel, while Brent settled Wednesday below $96.

Where the market stands

Dennis Kissler, senior vice president at BOK Financial Securities, said the latest escalation should provide support for prices, but cautioned that both Washington and Tehran appear to be looking for an exit ramp. "Signs of more peace talks could quickly push prices lower," he noted.

Year-to-date, crude prices have risen nearly 60%, driven by a combination of Middle East conflict and the Russia-Ukraine war, with refined products like diesel seeing even more pronounced gains.

Strait of Hormuz: Escalation or containment?

The latest U.S. air campaign against Iran broke several weeks of relative calm in the region. According to reports, U.S. Central Command announced that it had completed a new round of strikes on Iranian military targets, including air defense positions, radar systems, maritime assets and facilities, mine-laying capabilities, and communication sites belonging to Iran's Islamic Revolutionary Guard Corps.

Iran's Revolutionary Guard said it had begun responding to the U.S. attack, claiming to have shot down an American MQ-9 drone. Jordan's armed forces reported intercepting ten ballistic missiles fired from Iran within the past hours, with three additional missiles landing in remote areas.

Goldman Sachs analyst Privorotsky assessed that the situation remains relatively contained compared to worst-case scenarios, noting that Iranian actions have primarily targeted military installations rather than energy infrastructure. However, market attention has become entirely focused on the question of whether the Strait of Hormuz can remain open for traffic.

U.S. Energy Secretary Chris Wright said this week that approximately 17 million barrels of crude transited the Strait of Hormuz on Monday, with daily flows averaging around 8 million barrels.

Those figures, however, have drawn skepticism. Some tankers have switched off their Automatic Identification System (AIS) transponders to avoid risk while departing port, raising questions about the accuracy of reported flow data. Analysts suggest that if flows are indeed normalizing toward that level, oil prices could face downward pressure.

Diplomatic stalemate persists after ceasefire collapse

Another key factor underpinning oil prices is the continuation of diplomatic gridlock. Since the collapse of a phased ceasefire agreement reached in June, neither Washington nor Tehran has shown willingness to return to the negotiating table, suppressing hopes for a rapid de-escalation. BOK Financial Securities' Kissler reiterated that while the latest escalation should continue to support prices, both parties are searching for an exit strategy, and any indication of renewed peace talks could trigger a swift correction.

Historical patterns suggest such conflicts often spike sharply before entering a rapid cooling phase. Some market participants are watching whether a political window may open before the U.S. Labor Day holiday, which could serve as a key indicator for the direction of the situation.

Unexpected crude drawdown, diesel supply squeeze

Fundamental data has also lent support to prices. The U.S. Energy Information Administration reported that domestic crude inventories fell by 4.5 million barrels last week, the first decline since late July. Cushing, Oklahoma delivery hub stocks edged up to 22.5 million barrels, while gasoline inventories ticked lower.

Supply pressure on refined products such as diesel and distillates remains a notable concern. Disruptions to refinery operations and product shipping caused by the Middle East conflict have pushed diesel price gains beyond those of crude itself, establishing another structural pressure point in the current energy rally.