Brent and WTI crude futures eased on Thursday, ending a three-session rally as traders weighed ongoing U.S. military action against Iran. Both benchmarks had jumped nearly 10% earlier in the week on fears of disruption to shipping through the Strait of Hormuz.
Crude prices pulled back on Thursday after a sharp run higher, as investors gauged the fallout from U.S. military operations against Iran and the risk of prolonged disruption to exports through the Strait of Hormuz. WTI crude futures slipped 0.3% to $79.36 a barrel, while Brent for September delivery fell 0.4% to $84.48.
The retreat followed a strong start to the week. Both benchmarks had surged nearly 10% to one-month highs after renewed tensions in the Iran conflict raised concerns over supply. A fresh wave of U.S. strikes on Wednesday targeted Iranian military facilities linked to attacks on commercial vessels.
Strait of Hormuz keeps traders on edge
The market stayed focused on the Strait of Hormuz, a route that typically handles about one-fifth of global oil and liquefied natural gas shipments. Traffic through the waterway remains well below normal levels, with just seven vessels transiting on Wednesday, down from 13 a day earlier.
Washington said the operation aimed to reduce Iran’s ability to threaten Gulf shipping, while Tehran called the conflict an “existential war” and warned regional energy exports could face further disruption. Speaking to reporters on Wednesday, U.S. President Donald Trump said Iran had reached out seeking a meeting, adding that “they always want to meet”, though no public evidence supported the claim.
Thin inventories raise the stakes
Analysts warned that the risk of renewed supply disruptions had grown because the market entered this period with significantly lower inventories following heavy drawdowns in the second quarter. Adding some support, the U.S. Energy Information Administration said crude inventories dropped by 1.7 million barrels in the week ended July 10.
Jefferies analysts said they expect the escalation phase to continue for several weeks even without a full-scale war, which could keep Hormuz shipping disrupted. For import-reliant economies that trade oil, sustained elevated prices could affect fuel prices, business expenses, and broader economic growth.
Sources: APAC Media, Investing.com
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