Oil Prices Extend Slide on Potential Hormuz De-Escalation and Surprise U.S. Inventory Build

Oil prices fell further in early trading Thursday, extending a sharp weekly decline as investors reacted to a potential easing of shipping tensions in the Middle East and a surprise increase in U.S. crude inventories that signaled softer demand.

As of 21:02 ET, the global benchmark Brent crude for October delivery was down 0.2% at $79.28 per barrel, while U.S. benchmark West Texas Intermediate (WTI) crude fell 0.4% to $74.90 per barrel. Both contracts are on track for weekly losses exceeding 10%, according to Investing.com data.

Hormuz Tensions Ease, But Risks Remain

Market sentiment was pressured after Iran announced it had reached an agreement with Oman on the coordinates for a shipping route through the Strait of Hormuz. The strait is a critical chokepoint for global energy, handling approximately one-fifth of the world's oil and liquefied natural gas (LNG) trade.

While the development eased some fears of a prolonged supply disruption, analysts noted that the agreement is not a full reopening of the strait. Key details regarding cargo fees, inspections, and security arrangements are still under negotiation. The geopolitical risk premium, which had recently pushed prices higher, has not been fully erased amid the uncertainty of a final, implementable deal.

Ad

U.S. Stockpiles Point to Softer Demand

Adding to the bearish pressure, U.S. government data revealed an unexpected build in domestic crude oil inventories. Key figures from the report include:

• U.S. crude inventories rose by 2.5 million barrels last week.
• This contrasts sharply with market expectations for a 1.5 million-barrel drawdown.
• Stockpiles also increased at the key Cushing, Oklahoma delivery hub for WTI futures.

This inventory build suggests that demand in the world's largest oil-consuming nation may be weaker than anticipated, further weighing on prices. Despite the positive news from the Strait of Hormuz, broader security concerns continue to underpin the market, including Houthi attacks on Red Sea shipping and disruptions to maritime trade in the Black Sea.