Key facts
- Oil prices fell as tankers continued to transit Middle East conflict zones.
- Brent futures decreased by 1.42% to $89.45 a barrel.
- U.S. West Texas Intermediate (WTI) crude fell 0.66% to $83.90 a barrel.
- The Strait of Hormuz, which handles about a fifth of global oil and gas flows, has been largely blocked.
- The U.S. military reported striking dozens of Islamic Revolutionary Guard Corps targets in Iran.
Oil prices experienced a decline on Thursday as tankers continued to navigate Middle East conflict zones, despite escalating tensions between the United States and Iran. Brent futures fell $1.29, or 1.42%, to $89.45 a barrel as of 0110 GMT, while U.S. West Texas Intermediate (WTI) crude dropped 56 cents, or 0.66%, to $83.90 a barrel.
Earlier in the session, Brent had risen $1.06 to $91.80 and WTI gained 39 cents to $84.85, following renewed attacks. The U.S. military reported hitting dozens of Islamic Revolutionary Guard Corps targets in Iran, including command centers and drone facilities, in response to Iran's ballistic missile attacks on U.S. forces.
Geopolitical tensions remain high, with the Strait of Hormuz, a critical chokepoint for global oil and gas flows, being a focal point. "Until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere," said Tim Waterer, chief market analyst at KCM Trade. The strait normally handles about a fifth of global oil and gas flows.
In related developments, the U.S. and Saudi Arabia jointly attacked Iran-backed paramilitary forces in Iraq on Wednesday, retaliating for drone attacks on Saudi oil targets originating from Iraq. However, analysts noted that investor focus is also on the volume of oil exiting key chokepoints and the potential for diplomatic resolutions. A Qatari LNG tanker reportedly passed through the Strait of Hormuz with Iran's permission.
The conflict has also impacted shipping through the Bab el-Mandeb strait, with Yemen's Houthi group reportedly considering imposing fees on commercial ships in the southern Red Sea. Preliminary shipping data indicated that 39 commodity ships passed through the Bab el-Mandeb strait into the Red Sea on Tuesday, the highest number since July 19, though only a few transited the Strait of Hormuz.