Key Highlights
- Brent crude retreated 1.5% to $94.22 per barrel while WTI declined 1.4% to $89.78 following three consecutive days of increases
- President Trump indicated the renewed U.S. military operations against Iran would be limited in duration
- The U.S. Energy Secretary reported 17 million barrels transited the Strait of Hormuz on Monday, marking the highest volume since hostilities disrupted normal flows
- Shipping activity through the strait continues to fluctuate significantly, with just four commodity tankers passing through on Tuesday compared to a 10-day average of 13 vessels
- U.S. commercial crude inventories decreased by 4.5 million barrels in the previous week, marking the first drawdown in five weeks
Oil prices retreated on Thursday following a three-day winning streak, as President Donald Trump indicated that the most recent U.S. military operations against Iran would have a limited timeframe.
Brent crude futures declined 1.5% to settle at $94.22 per barrel. West Texas Intermediate futures slipped 1.4% to close at $89.78 per barrel. Both benchmark contracts had reached five-week peaks during their recent upward momentum.
The recent price surge had been fueled by concerns that escalating U.S.-Iran military confrontations might interrupt oil shipments from the Middle East region. American military forces launched strikes on Iran’s southern coastal areas on Wednesday, prompting Tehran to retaliate with drone and missile attacks targeting U.S. military installations throughout the area.
The exchange represented the most significant military confrontation between the two nations since July.
Presidential Statements Provide Market Relief
When questioned about the expected duration of the U.S. military campaign, Trump responded “I don’t think too long,” while acknowledging that “we’re prepared to do another one.” These remarks helped alleviate some of the immediate concerns about potential supply disruptions in the oil market.
Trump further disclosed that U.S. forces had focused on Iranian radar installations, missile defense systems, and infrastructure associated with mine deployment operations near the Strait of Hormuz.
The Strait of Hormuz represents one of the world’s most critical petroleum shipping corridors. U.S. Energy Secretary Chris Wright reported that 17 million barrels of crude oil successfully transited the waterway on Monday, representing the largest volume since military tensions began affecting transportation flows.
However, maritime traffic patterns remain erratic. Preliminary tracking data indicated only four commodity-carrying vessels passed through the strait on Tuesday, substantially below the 10-day rolling average of approximately 13 ships.
Storage Levels and OPEC+ Developments
U.S. crude oil stockpiles decreased by 4.5 million barrels during the previous week. This marked the first inventory draw in five weeks and contrasted with analyst expectations for a modest build.
Gasoline inventories fell by 1.2 million barrels. Distillate stocks, encompassing diesel fuel and heating oil, increased by approximately 800,000 barrels.
Crude oil prices have surged more than 30% since the U.S.-Iran conflict intensified in late February. Refined petroleum products such as diesel have experienced even steeper price increases.
Market participants are also monitoring OPEC+, which is anticipated to maintain its October production strategy unchanged during a scheduled meeting on Sunday. The coalition had previously increased September production quotas by 188,000 barrels per day as part of a planned gradual reversal of previous supply cuts.
A peace agreement reached in June between the U.S. and Iran in Islamabad has broken down, and neither party has demonstrated willingness to resume diplomatic negotiations since then.
Dennis Kissler from BOK Financial Securities suggested that renewed peace discussions could rapidly reduce prices, but noted that both nations appear to be seeking an exit strategy from the ongoing confrontation.
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