Oil prices extended their decline for a fourth straight session on Thursday, falling to their lowest levels since before the U.S.-Iran conflict began, as concerns over supply disruptions in the Middle East continued to fade.
Brent crude dropped below $73 per barrel, while WTI crude fell beneath $70, with both benchmarks now trading near levels last seen in late February. The decline has effectively erased much of the geopolitical premium that was added during the conflict.
Market sentiment improved as shipping activity through the Strait of Hormuz continued to recover. U.S. officials indicated that crude shipments through the vital waterway have largely returned to normal, with military protection helping restore confidence among shipping operators.
Investors are also assessing the possibility of increased Iranian oil exports following temporary sanctions relief and easing regional tensions, reducing fears of a prolonged supply shortage.
While U.S. crude inventories posted a larger-than-expected decline, gains in gasoline and distillate stockpiles offset some bullish sentiment. Analysts caution that although tensions have eased, any renewed conflict in the region could quickly reignite supply concerns and push prices higher again.
Frequently Asked Questions
Why are oil prices falling?
Supply concerns have eased as shipping through the Strait of Hormuz returns to normal.
What happened to the war-related oil premium?
Most of the geopolitical risk premium built during the conflict has now been erased.
How is the Strait of Hormuz affecting markets?
Improved traffic through the strait has reduced fears of major supply disruptions.
What role could Iran play in oil markets?
Easing tensions and sanctions relief could allow Iranian oil exports to increase.
What risk remains for oil prices?
Any renewed escalation between the U.S. and Iran could quickly drive prices higher again.
