Oil prices moved slightly lower on Thursday, pausing after three consecutive sessions of gains, as traders continued to evaluate the impact of the conflict between the United States and Iran on global energy supplies and shipping routes through the Strait of Hormuz.
By 04:38 ET (08:38 GMT), Brent crude for September delivery had fallen 0.4% to US$84.58 a barrel, while West Texas Intermediate (WTI) crude slipped 0.1% to US$79.56 a barrel.
Both benchmark contracts had climbed almost 10% earlier in the week, reaching their highest levels in a month following the renewed escalation in the Middle East.
Strait of Hormuz remains the key concern
Market attention remains centred on the Strait of Hormuz, a strategic shipping route that normally carries around one-fifth of global oil and liquefied natural gas exports.
Oil prices had risen after the United States launched another series of strikes on Wednesday targeting Iranian military facilities linked to attacks on commercial shipping.
Washington said the operation was intended to reduce Iran’s ability to threaten maritime traffic in the Gulf.
Iran responded by describing the conflict as an “existential war” with the United States and warned that energy exports from the region could face additional disruption if hostilities continue.
Analysts warn of prolonged supply risks
The renewed conflict has reversed much of the optimism that followed last month’s temporary easing of tensions.
“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 a note.
“In addition, global SPR releases, which have helped the market out over recent months, are set to end in the next few weeks,” analysts added.
Jefferies analysts believe the current period of heightened tensions could continue for several weeks, even if it does not escalate into a broader conflict. They expect shipping through the Strait of Hormuz to remain disrupted, supporting higher oil prices.
Inventory data provides additional support
The latest US inventory figures also offered support to the oil market.
The Energy Information Administration reported that US crude oil inventories declined by 1.7 million barrels during the week ended 10 July, broadly matching market expectations.
Gasoline inventories fell by 1.5 million barrels as summer driving demand remained robust, although distillate stockpiles unexpectedly increased by 4.6 million barrels.
Meanwhile, the International Energy Agency said in its July Oil Market Report that although shipping through the Strait of Hormuz partially recovered during June, the latest escalation has increased uncertainty and could delay expectations for a return to an oil market surplus in 2027.