Oil Eases Amid US-Iran Tensions

Crude oil slipped below $84 per barrel on Thursday, paring gains from the previous session even after the US carried out a fresh wave of air strikes against Iran in response to attacks on American forces across the Middle East, raising concerns over further disruptions to global energy supplies. The two sides also remained unable to reach a potential agreement as Tehran insisted on maintaining control of the Strait of Hormuz. The conflict has now expanded beyond Hormuz into the Red Sea, where Iran-backed Houthi rebels in Yemen threatened to blockade Saudi Arabia, prompting Riyadh to join US forces in launching strikes on targets in Iraq linked to Tehran-backed militants. In the US, commercial crude inventories posted their largest draw since mid-June, reinforcing signs of a tightening physical market. The nation’s strategic petroleum reserves also declined for an 18th straight week, falling to their lowest level since 1983.

Crude oil eased below $84 per barrel on Thursday, but held most of the gains from the previous session as renewed fighting between the US and Iran that threatened further disruptions to global energy supplies. President Donald Trump pledged a strong response after an attack on US forces in Jordan. Meanwhile, both sides continued to struggle to reach a potential deal as Tehran insisted on maintaining control over the Strait of Hormuz. The conflict has also expanded beyond Hormuz into the Red Sea, where Iran-backed Houthi rebels in Yemen threatened to blockade Saudi Arabia, prompting Riyadh to join US forces in striking targets in Iraq associated with Tehran-backed militants. In the US, commercial crude inventories recorded their largest draw since mid-June, reinforcing signs of a tightening physical market. The nation’s strategic petroleum reserves also fell for an 18th consecutive week, reaching their lowest level since 1983.

Crude oil extended gains to rise more than 7% to around $85 a barrel on Wednesday, snapping a three-day losing streak, as hostilities in the Middle East increased. US President Trump said the US will hit Iran hard in retaliation for an attempted surprise attack on American forces. This comes after the US military said it had successfully intercepted what it described as a surprise Iranian attack targeting US troops stationed across the Middle East. Meanwhile, Iran-backed militias in Iraq launched drones at oil facilities in Saudi Arabia’s Eastern Region for a second consecutive day. Also, there were reports that Yemen's Houthi militants were considering charging fees for vessels transiting the Red Sea, adding to concerns over shipping costs and energy flows. Iran has also sought to impose similar charges on the Strait of Hormuz. In the US, API data showed crude oil inventories fell by 3.3 million barrels last week, pointing to continued tightness in global oil supplies.