Oil prices retreated on Thursday following a three-session winning streak, responding to President Donald Trump’s indication that current U.S. military strikes against Iran would be limited in scope and duration.
Brent crude futures declined 1.5% to settle at $94.22 per barrel. West Texas Intermediate fell 1.4% to close at $89.78 per barrel. Both benchmark contracts had reached five-week peaks during their recent advance.
The recent price surge stemmed from concerns that escalating U.S.-Iran tensions could threaten oil supply routes from the Middle East. American forces conducted strikes on Iran’s southern coastal region Wednesday, prompting Tehran to retaliate with drone and missile attacks on U.S. military installations throughout the region.
The exchange marked the most significant military confrontation between Washington and Tehran since July.
Responding to questions about the campaign’s expected duration, Trump stated “I don’t think too long,” while acknowledging that “we’re prepared to do another one.” His remarks helped alleviate immediate concerns about prolonged supply disruptions.
The President elaborated that American forces had focused on Iranian radar installations, missile defense systems, and infrastructure associated with mine-laying operations near the Strait of Hormuz.
The Strait of Hormuz represents a critical chokepoint for global oil transportation. Energy Secretary Chris Wright reported that 17 million barrels of crude oil transited the waterway on Monday, representing the peak volume since military operations began affecting shipping patterns.
However, maritime traffic remains 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.
American crude oil inventories declined by 4.5 million barrels during the previous week. The drawdown represented the first weekly decrease in five weeks and fell short of analyst expectations for a modest build.
Gasoline inventories decreased by 1.2 million barrels. Distillate stockpiles, encompassing diesel fuel and heating oil, increased by approximately 800,000 barrels.
Crude prices have surged more than 30% since U.S.-Iran hostilities intensified in late February. Refined petroleum products such as diesel have experienced even steeper increases.
Market participants are monitoring OPEC+, which is anticipated to maintain its October production strategy at Sunday’s scheduled meeting. The cartel previously increased September production quotas by 188,000 barrels per day as part of a planned reversal of previous supply cuts.
A diplomatic agreement reached in June between Washington and Tehran in Islamabad has disintegrated, with neither party demonstrating willingness to resume negotiations since then.
Dennis Kissler from BOK Financial Securities suggested that renewed diplomatic engagement could rapidly pressure prices downward, though he noted that both nations appear to be seeking an exit strategy from the current confrontation.
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