Oil rises amid reduced optimism on peace agreement
Yesterday (25), the most active Brent contract closed down 2.2%, quoted at USD 102.2/bbl. WTI futures followed the same trajectory, ending the day at USD 90.3/bbl, also down 2.2%.
Crude oil futures were broadly pressured after the United States sent a ceasefire proposal to Iran, raising expectations of a potential easing of tensions in the Middle East. In the afternoon, however, part of the losses were reversed after the Iranian government denied any peace talks with Washington.
This morning (26), the May 2026 Brent contract is trading up 4.5%, quoted at USD 106.8/bbl at 09:00. Low expectations regarding the consolidation of a peace agreement between the U.S. and Iran have allowed bullish momentum to return to the market.
Peace talks remain uncertain
Last night, Iran’s Minister of Interior confirmed that the country is analyzing a peace proposal sent by the U.S. However, it was also stated that the Iranian regime does not consider initiating talks with Washington to approve measures aimed at containing tensions, but rather to achieve a complete suspension of the conflict.
Why this matters: Despite the diplomatic rapprochement between the two countries, the market understands that Washington and Tehran are working with several points of divergence in the negotiations, causing expectations for a short-term agreement to decline again.
- The lower optimism regarding alignment between the U.S. and Iran, combined with the continued blockade of the Strait of Hormuz, is supporting oil prices, with investors pricing a larger supply disruption in Asia, which is already showing signs of wider stress due to the lack of product from the Persian Gulf.
Overview: In recent days, the market has observed the White House seeking to reach a mutual agreement with Iran to end the war. At the same time, Washington continues to suggest that if negotiations fail, it is considering escalating measures, including ground incursions into Iranian territory.
- On Tuesday (24), The Wall Street Journal confirmed the deployment of 3,000 U.S. soldiers to the Middle East, increasing fears of a potential ground invasion.
- Additionally, last night, White House Press Secretary Karoline Leavitt confirmed that if Tehran does not accept the U.S. terms, the Trump Administration “will hit harder” in Iran, indicating a possible escalation of the conflict.
What to expect: The conflict between the U.S. and Iran appears to be reaching another level, with the saturation of the oil market due to the blockade of the strait resulting in the need to reopen the channel that connects the Persian Gulf to the rest of the world.
- With around 12 mbpd of oil stuck in the region, containment measures — including the release of strategic reserves by the IEA and permissions to buy Russian and Iranian oil stuck at sea — are not enough to ensure full supply, with consumption restriction policies already being evaluated in some Asian countries.
- In Brazil, the main concern lies with diesel cargoes arriving in April, as the intense international competition reduces traders’ ability to acquire the full programmed volume for the period.
DOE reports increase in U.S. crude inventories
Crude oil: According to DOE data, U.S. commercial crude inventories increased last week, in line with market expectations.
- The increase was driven by high production and strong imports, with storage levels operating close to the five-year average for the period.
- In contrast, demand for the commodity remained strong, with refinery utilization surpassing 93 points.
- Overall, extremely high refining margins — especially for diesel — supported this elevated crude consumption.
- It is important to remember that the data reflects last week’s market conditions, meaning that recent confirmations of a significant increase in U.S. crude and product export capacity to Asian countries have not yet appeared in the DOE report and should only be reflected next week.
Diesel: Diesel inventories also rose, moving away from the five-year lows for the period.
- The strong increase in fuel production, which operates with more attractive margins compared with other fossil derivatives, was the main driver of this week’s surplus.
- Additionally, U.S. diesel demand for heating declined again, contributing to this scenario.
- As a result, the Heating Oil–Brent differential fell again, recording a daily drop of 12.9%. Still, the indicator remains much higher compared with recent weeks, trading around USD 66/bbl.
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