Meanwhile, Donald Trump girds for a resumption of strikes against the Islamic republic: File Image/Pixabay.

Oil trading on Wednesday was tepid as investors seemed to grasp that the U.S. and Iran were engaged in a ceaseless cycle of hostility, mixed messages and pauses that only heralded more conflict – with Iran’s latest declaration being that as long as the U.S, and Israel have nuclear weapons, it will continue to develop its own.

Given Washington’s motivation to keep bombing Iran until its nuclear capabilities are obliterated, analysts braced for a continued impasse between the two countries – and more disruption of oil flows through the Strait of Hormuz.

After U.S. president Donald Trump said an “all-day negotiation” was taking place with Iran and Iran denied that talks were underway, Brent crude futures settled up 9 cents at $79.45 per barrel; West Texas Intermediate futures fell 55 cents to $75.22 per barrel.

The market was seemingly unimpressed with reports of a deal being ratified regarding the Hormuz: two regional officials told the Associated Press that a draft agreement between Iranian and Omani negotiators had been finalized and would direct ships entering the Persian Gulf through waters controlled by Iran, while vessels leaving the Gulf would use a route administered by Oman.

Tehran was reportedly seeking payments equivalent to between 5 percent and 7 percent of cargo value, while Oman  proposed a 3 percent charge; Washington has rejected any arrangement for ships to pay Iran in an open international waterway.

Phil Flynn, senior market analyst with Price Futures Group Inc., remarked, "This agreement seems as tenuous as past agreements, and as we know, none of those have held up for very long."

IG analysts wrote in a note, "The main sticking point appears to be whether Iran will continue to insist on a degree of control over the waterway, and whether the U.S. will stand its ground and refuse that outcome."

The prospect of achieving a wider peace agreement seemed more remote than ever on Wednesday: IRGC commander-in-chief Ahmad Vahidi stated  that "As long as the United States and Israel possess nuclear weapons, we will continue working on them for our national security…If they disarm, we will disarm."

In response, Israel vowed to prevent Iran from fulfilling its ambitions, and Trump told media that in terms of the latest negotiation attempt, "If they back out again, they’re going to get hit really hard…They know that, they understand that, they can’t have a nuclear weapon-it’s very simple.”

Also on Wednesday, despite the concern about the war causing global supply tightness, the U.S. Energy Information Administration disclosed that crude stockpiles rose by 2.5 million barrels to 407 million barrels last week, compared to expectations of a 1.5 million barrel draw.