Oil prices edged lower on Thursday, taking a breather after a sharp three-day rally, as investors continued to assess the impact of the conflict involving Iran on global energy supplies and the security of the Strait of Hormuz.
At 04:38 ET (08:38 GMT), Brent crude for September delivery slipped 0.4% to US$84.58 per barrel, while West Texas Intermediate (WTI) crude eased 0.1% to US$79.56 per barrel.
The two global benchmarks had surged nearly 10% earlier in the week, reaching one-month highs after geopolitical tensions intensified.
Hormuz remains the market’s main concern
The Strait of Hormuz continues to dominate market attention, with around 20% of global oil and liquefied natural gas exports passing through the strategic waterway.
Oil prices climbed after the United States carried out another round of strikes against Iranian military targets linked to attacks on commercial shipping.
US officials said the operation was designed to weaken Iran’s ability to threaten maritime trade in the Gulf, while Tehran warned that the conflict represented an “existential war” with the United States and cautioned that regional energy exports could face further disruption.
Analysts expect volatility to continue
Analysts believe the latest escalation has significantly increased supply risks.
“The concern is that renewed oil supply disruptions come amid the large inventory drawdowns through the second quarter, leaving the market more vulnerable,” ING analysts said.
“In addition, global SPR releases, which have helped the market out over recent months, are set to end in the next few weeks,” they added.
Jefferies also expects the current tensions to continue for several weeks, arguing that shipping through the Strait of Hormuz is likely to remain constrained even if the conflict does not broaden into a full-scale war.
Inventory data supports crude prices
US inventory figures also provided a supportive backdrop.
The Energy Information Administration reported a 1.7 million-barrel decline in crude oil inventories during the week ended 10 July, broadly matching market forecasts.
Gasoline inventories fell by 1.5 million barrels as seasonal demand remained strong, while distillate stocks unexpectedly increased by 4.6 million barrels.
The International Energy Agency warned in its latest Oil Market Report that although shipping through the Strait of Hormuz improved during June, the renewed conflict has increased uncertainty and could postpone expectations for an oil market surplus in 2027.
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