Iran's insistence of control of the Strait plus nuclear development renders a peace accord unlikely: File Image/Pixabay

Alarm bells on Thursday again sounded within the oil trading community after officials reported  “good signs” in the U.S./Iran peace talks, yet Iran was still firm about its nuclear development capabilities and control over the Strait of Hormuz – meaning the good signs were likely trivial issues.

As a result, as of 0755 GMT, Brent gained a mere 48 cents to $79.93 per barrel, and West Texas Intermediate eked out a gain of 29 cents to $75.51 per barrel; however, prices have fallen about 8 percent for the week.

For once, headline-driven traders seemed to ignore U.S. secretary of state Marco Rubio’s assessment of “some good signs” occurring in the talks, and their alarm was stoked by PVM Oil Associates analyst Tamas Varga remarking that global oil inventories were depleting severely as flows via the Hormuz slowed to a trickle.

Tim Waterer, chief market analyst at KCM Trade, said, "Traders still remember the short-lived Memorandum of Understanding signed in June, so there is ⁠understandable anxiety that any new deal could prove equally fragile."

Given Washington’s core objective that Iran relinquish all control of the Hormuz, investors were understandably concerned by a proposed deal between Iran and Oman that would give Tehran control over ships trying to transit the waterway.

Also, CNBC reported that under the plan, “Iran would ban U.S. and Israeli ships from transiting the Strait"; other nations favourable to those countries would have to pay compensation to use the waterway, and violators would have to pay 20 percent of the value of cargo aboard a ship.

In the previous session, Iran sent clear signals that peace was unfeasible by declaring it would continue to develop nuclear weapons unless the U.S. and Israel disarmed their nuclear stocks.

Still, optimism lingered that somehow an agreement could be reached beneficial to both parties, and Saudi Aramco on Thursday announced it will reduce the September official selling price for Arab Light by 50 cents per barrel, putting it at a $2 discount to the regional benchmark; the initiative was inspired by hope that more tankers would soon move through the Strait.

Meanwhile, the latest casualty of the U.S./Iran war seemed to be a Saudi Arabia-flagged oil tanker that the Iran-aligned Houthis claimed to have struck in the Red Sea using several ballistic missiles; as a result, vessel traffic at the Bab el-Mandeb strait ground to a halt.