Oil prices edged lower on Thursday as investors assessed the risk of further military escalation between the US and Iran and its potential impact on crude supplies from the Middle East.
Brent crude futures fell 43 cents, or 0.45%, to US$95.20 a barrel at 0029 GMT, while US West Texas Intermediate crude futures slipped 24 cents, or 0.26%, to US$90.77.
The latest exchange of attacks marked the most substantial direct confrontation between the US and Iran since July, with the conflict now entering its seventh month. Both Brent and WTI had swung sharply during the previous session, rising as much as US$2 before falling around US$1, while session highs reached their highest levels since July 24.
Oil prices eased on tentative signs that the latest flare-up could be losing momentum, with no confirmed exchange of fire reported since around midday on Wednesday, Sydney time, according to IG analyst Tony Sycamore.
US President Donald Trump said on Wednesday that the renewed US campaign against Iran would not continue for “too long”, while confirming that US forces had targeted Iranian radar and missile systems.
“We took out all of the new equipment that they tried to build along the Strait of Hormuz – some defensive, some offensive … It was a very heavy attack last night, and we’re prepared to do another one any time we want,” Trump said.
Sycamore said that if the easing in tensions holds, oil flows through the Strait of Hormuz via so-called dark-ship transits and ship-to-ship transfers could return to levels seen towards the end of last week.
However, shipping activity remains subdued. Preliminary data from Kpler showed four commodity vessels transited the Strait of Hormuz on Wednesday, well below the 10-day average of around 13 vessels.
Iran has also added more ships to a list of vessels it considers non-compliant, warning they could face fines, confiscation or detention if they attempt to sail through the strategic waterway.
The US said 17 million barrels of oil passed through the Strait of Hormuz on Monday, describing it as the largest volume of crude to transit the waterway since the US-Israeli war against Iran began.
The Strait of Hormuz remains a key supply route for global oil markets, meaning any prolonged disruption could put renewed upward pressure on crude prices.
Reuters
