Summary
- Global oil prices slipped on Thursday after signs of diplomatic progress in the Middle East eased concerns over potential supply disruptions, while a move by U.S.
- Market analysts noted that shrinking inventories continue to underpin oil prices despite the latest pullback.
- In a research note, Haitong Futures said global crude stocks have been declining at a rapid pace, creating an ongoing imbalance between supply and demand.
Global oil prices slipped on Thursday after signs of diplomatic progress in the Middle East eased concerns over potential supply disruptions, while a move by U.S. lawmakers to limit President Donald Trump’s authority to continue military operations against Iran further improved market sentiment.
International benchmark Brent crude fell by 67 cents, or 0.69%, to trade at $97.14 per barrel in early trading. Meanwhile, U.S. West Texas Intermediate (WTI) crude declined by 62 cents, or 0.65%, to $95.40 per barrel.
The decline followed a strong rally in the previous session, when both benchmarks gained nearly 2% amid escalating tensions across the Middle East. Markets had reacted sharply to reports of Iranian attacks on Kuwait and U.S. military operations near the strategically important Strait of Hormuz, a critical route for global energy supplies.
However, investor concerns eased after a ceasefire agreement between Israel and Lebanon raised expectations that broader diplomatic efforts could help contain regional hostilities and potentially pave the way for renewed negotiations involving Iran.
Adding to the optimism, President Trump indicated on Wednesday that discussions with Tehran could witness progress as early as this weekend. His remarks fueled hopes that a diplomatic breakthrough may reduce the risk of a prolonged conflict that could threaten oil exports from the region.
Iranian Foreign Minister Abbas Araqchi also signaled that communication channels between Tehran and Washington remain open despite ongoing disagreements. Speaking on Wednesday, he said that while no major breakthrough had been achieved, both sides were continuing to review proposals and exchanged documents as part of the negotiation process.
Meanwhile, political developments in Washington also drew attention from energy markets. The Republican-controlled U.S. House of Representatives approved a resolution aimed at restricting the president’s ability to continue military action against Iran without congressional authorization.
The measure still faces significant hurdles before becoming law. It must first secure approval in the Senate and would then require a two-thirds majority in both chambers of Congress to override an expected presidential veto. Nevertheless, the vote was viewed by analysts as a signal of growing political pressure to avoid further military escalation.
On the supply side, fresh data from the U.S. Energy Information Administration (EIA) provided support to oil markets. The agency reported that U.S. crude inventories dropped by 8 million barrels to 433.7 million barrels during the week ending May 29. The decline was substantially larger than the 4 million-barrel draw anticipated by analysts, indicating stronger-than-expected demand and tighter supplies.
Market analysts noted that shrinking inventories continue to underpin oil prices despite the latest pullback. In a research note, Haitong Futures said global crude stocks have been declining at a rapid pace, creating an ongoing imbalance between supply and demand.
The firm suggested that, barring a major geopolitical de-escalation or a significant increase in production, crude prices could remain elevated and move toward the upper end of their recent trading range in the coming weeks.
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