Oil Prices Retreat From 5-Week Highs as Iran Tensions Subside

Oil prices edged lower in Asian trading on Thursday, pulling back from five-week highs after comments from U.S. President Donald Trump tempered fears of a prolonged military conflict with Iran. The decline follows a three-day rally driven by escalating geopolitical tensions that threatened to disrupt key supply routes in the Middle East.

As of 20:49 ET (00:49 GMT), key benchmarks were down:

• Brent crude futures for November delivery fell 0.4% to $95.25 per barrel.
• West Texas Intermediate (WTI) crude futures slipped 0.2% to $90.80 per barrel.

Both contracts had gained nearly 1% on Wednesday, reaching their highest levels in over a month amid renewed clashes between U.S. and Iranian forces.

Geopolitical Risk Eases

The immediate catalyst for the price drop was a statement from President Trump on Wednesday, who signaled that the renewed U.S. military campaign against Iran would not be an extended one. This helped alleviate market concerns about a major, long-term disruption to oil supplies from the region.

The comments followed the most intense exchange of fire between the two nations since July, where U.S. forces targeted Iranian military capabilities, including radar and missile systems, according to the President.

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Conflicting Supply Data

While geopolitical tensions eased, physical market data presented a mixed picture for investors. U.S. government figures revealed a surprise drop in commercial crude inventories, which fell by 4.5 million barrels last week. This marked the first decline in five weeks and defied analyst expectations for a small increase, a typically bullish signal for prices.

Meanwhile, traffic through the critical Strait of Hormuz remains volatile. U.S. Energy Secretary Chris Wright noted that a high volume of 17 million barrels of crude passed through the waterway on Monday. However, preliminary data from Kpler showed that only four commodity vessels transited the strait on Tuesday, a sharp drop from the 10-day average of about 13.

Market Awaits OPEC+ Decision

Looking ahead, market participants are turning their attention to the upcoming OPEC+ meeting on Sunday. The producer group is widely expected to maintain its current oil output policy for October.

This follows the scheduled unwinding of a 1.65 million-barrel-per-day layer of production cuts. For September, the alliance had already raised its output quotas by 188,000 barrels per day.