TOKYO, May 7 - U.S. crude futures rose by about $1 in early trade on Thursday, recovering from the prior day's drop as market participants evaluated the likelihood of a Middle East peace agreement.
West Texas Intermediate (WTI) crude futures were up 80 cents, or 0.8%, trading at $95.88 a barrel as of 2223 GMT, after earlier climbing to $96.33 in the session.
Traders had pushed the benchmark contract down by roughly 7% on Wednesday amid growing optimism that the war in the Middle East could be brought to a close. Reports circulating in markets indicated that the United States and Iran were approaching an initial agreement.
Sources involved in mediation activities, including one linked to Pakistan and another individual familiar with the discussions, told reporters that negotiators were close to finalizing a one-page memorandum intended to formally end the conflict.
Iran publicly said it was reviewing a U.S. peace proposal. According to accounts of the proposal, the draft would formally end the war while not resolving certain central U.S. demands - specifically, that Iran suspend its nuclear program and reopen the Strait of Hormuz. An Iranian foreign ministry spokesperson, cited by Iran's ISNA news agency, stated that Tehran would communicate its response to the offer.
U.S. President Donald Trump commented that he believed Iran wanted an agreement.
Market context
The recent price movements reflect rapid market reactions to developments in diplomatic talks. The earlier one-day decline and the subsequent partial rebound illustrate sensitivity to evolving expectations about conflict resolution.
Conclusion
Crude prices rebounded on Thursday as traders continued to assess reports that mediators were closing in on a concise memorandum that could end the conflict. Key elements of any settlement - including the U.S. demands on Iran's nuclear program and the status of the Strait of Hormuz - remained unresolved and were actively under review by Iranian authorities.