Oil slipped following three days of gains after Israel and Lebanon agreed to a ceasefire if Hezbollah also stops hostilities, which would remove a key sticking point in talks between Washington and Tehran.

Brent fell toward $97 a barrel while West Texas Intermediate was near $96, after adding almost 10% in the week¡¯s first three sessions. The deal is contingent on ¡°a complete cessation¡± of fire from Iran-backed Hezbollah, according to a statement from both countries and the U.S.

While Washington and Tehran have agreed on a rough framework to extend their truce by two months and reopen the Strait of Hormuz, negotiations over the final details are dragging on, and there¡¯s also been a flare-up in fighting.

¡°No tangible progress has been achieved¡± in the talks, and Iran is prepared to target objectives inside Israel if its attacks on Beirut continue, the semiofficial Tasnim news agency reported the Islamic Republic¡¯s foreign minister as saying.

Oil has erased last week¡¯s drop as the clashes sapped optimism over a deal to extend the current ceasefire, and potentially see flows resume through the strait. As negotiations drag on, the world¡¯s supply cushion is rapidly running out. U.S. government data on Wednesday showed crude stocks at Cushing, Oklahoma, the delivery point for WTI, fell for a sixth week to near what is known as the minimum operating level.

Although an Israel-Lebanon ceasefire could reduce near-term upside risks to prices, as long as the strait remains technically closed, Brent crude is likely to spike to as high as $130 in the fourth quarter as global inventories tighten, said Robert Rennie, head of commodity research at Westpac Banking Corp. ¡°The market is asleep at the wheel, even as we drive rapidly toward aggressive tightening in crude and product markets,¡± he said.

U.S. President Donald Trump said the Strait of Hormuz would open ¡°immediately¡± upon Iran signing a memorandum of understanding to cease armed hostilities ¡°subject to a couple of areas being cleaned out, also of mines.¡± He downplayed the threat of mines in the strait to commercial shipping.

The oil market¡¯s main focus remains the key waterway, through which one-fifth of global crude normally passes. The effective paralysis of the chokepoint under a double blockade by Tehran and Washington has sent fuel prices higher, as vessel movements remain limited.

Meanwhile, the Republican-led House of Representatives voted to halt the U.S. war with Iran, showing that worries over the conflict are spreading in the president¡¯s own party five months before midterm elections. The ballot won¡¯t end American military attacks on the Islamic Republic, as the Senate would still have to pass the resolution and provisions in the 1973 War Powers Act that the...