Oil Prices Dip as Markets Assess U.S.-Iran Military Strikes

Oil prices edged lower in early trading on Thursday, as investors assessed the supply implications of recent military exchanges between the United States and Iran. The slight pullback follows a highly volatile previous session where traders balanced the risk of significant Middle East supply disruptions against signs that the immediate conflict may be easing.

Price Action and Market Volatility

International benchmark Brent crude futures fell 43 cents, or 0.45%, to $95.20 a barrel by 0029 GMT, according to Reuters data. U.S. West Texas Intermediate (WTI) crude futures declined by 24 cents, or 0.26%, to $90.77 a barrel.

The movements came after a turbulent prior session where both Brent and WTI swung between gains of as much as $2 a barrel and losses of $1. The session highs for both benchmarks were the highest recorded since July 24, reflecting the market's sensitivity to geopolitical flare-ups in the critical oil-producing region.

Geopolitical Tensions in Focus

The latest military actions represent the most substantial exchange of fire between the U.S. and Iran since July. U.S. President Donald Trump stated on Wednesday that U.S. forces had conducted a "very heavy attack" on Iran’s radar and missile systems and were "prepared to do another one any time we want."

Ad

However, prices retreated on what IG analyst Tony Sycamore described in a note as "tentative signs that the latest flare-up was easing," with no confirmed exchanges of fire since midday Wednesday, Sydney time. He added that if the de-escalation holds, vessel traffic could return to levels seen late last week.

Impact on Strait of Hormuz Transit

Shipping through the vital Strait of Hormuz chokepoint is being closely monitored. Preliminary data from Kpler on Wednesday showed that just four commodity vessels transited the strait, significantly below the 10-day average of approximately 13.

This slowdown contrasts with a U.S. statement on Tuesday that a record 17 million barrels of oil passed through the waterway on Monday, the largest single-day volume since the conflict began. The situation remains fluid, with Iran reportedly adding more ships to a list of vessels it deems non-compliant, making them subject to potential detention or fines.