Key facts
- Oil prices declined as investors considered the uncertainty surrounding U.S.-Iran military actions.
- Brent crude futures fell 0.45% to $95.2 per barrel.
- U.S. West Texas Intermediate crude futures decreased by 0.26% to $90.77 per barrel.
- President Donald Trump indicated that U.S. strikes against Iran would be limited in duration.
- Shipping data showed a below-average number of commodity vessels transiting the Strait of Hormuz.
Oil prices experienced a slight decline on Thursday as market participants assessed the potential ramifications of renewed military exchanges between the U.S. and Iran, which could disrupt crucial Middle East supplies. Brent crude futures dropped by 43 cents, or 0.45%, to settle at $95.2 a barrel, while U.S. West Texas Intermediate (WTI) crude futures decreased by 24 cents, or 0.26%, to $90.77.
The recent escalation marks the most significant confrontation between the U.S. and Iran since July, occurring amidst the ongoing seventh month of conflict. During the previous trading session, both Brent and WTI benchmarks saw considerable volatility, swinging between gains of up to $2 a barrel and losses of $1 a barrel, with session highs reaching their highest levels since July 24.
Analysts suggested that oil prices retreated due to tentative indications that the latest tensions might be easing. IG analyst Tony Sycamore noted in a report that there had been no confirmed exchange of fire since midday Wednesday, Sydney time. U.S. President Donald Trump stated on Wednesday that the renewed U.S. campaign against Iran would not persist for an extended period and that U.S. forces had specifically targeted Iran's radar and missile systems. Trump elaborated that all new equipment, both defensive and offensive, constructed along the Strait of Hormuz had been neutralized, describing the attack as heavy and indicating readiness for further action.
Sycamore added that if the de-escalation holds, oil shipments through the Strait of Hormuz via dark-ship transits and ship-to-ship transfers could return to levels seen at the end of the previous week. Preliminary shipping data from Kpler indicated that only four commodity vessels transited the Strait of Hormuz on Wednesday, falling below the 10-day average of approximately 13 vessels. Iran has also expanded its list of non-compliant vessels subject to penalties if they attempt to pass through the strait. The U.S. reported on Tuesday that 17 million barrels of oil transited the Strait of Hormuz on Monday, marking the largest volume of crude to pass through the waterway since the commencement of the U.S.-Israeli war on Iran.