Oil prices fell sharply on Thursday, retreating more than 3% as rising expectations of a broader de-escalation in Middle East tensions eased fears of supply disruptions in a region central to global crude flows.
The decline came as investors reacted to reports suggesting progress toward a ceasefire framework involving key regional actors, including Israel and Lebanon, alongside tentative diplomatic signals tied to the wider Iran–U.S. geopolitical dispute.
Brent crude futures fell by 2.67% to $95.20 per barrel, while U.S. West Texas Intermediate (WTI) dropped $2.98, or 3.1%, to $93.04 per barrel at settlement.
Latest Oil Prices:
WTI Crude $92.85 -0.19 -0.20%
Brent Crude $95.03 -2.78 -2.84%
Murban Crude $93.50 -3.67 -3.78%
WTI Midland $93.69 -3.11 -3.21%
Indian Basket $100.1 +0.00 +0.00%
Natural Gas $3.359 +0.023 +0.69%
Gasoline $3.046 +0.007 +0.24%
Heating Oil $3.665 -0.009 -0.24%
Market sentiment improved as hopes grew that escalating regional conflicts could shift toward negotiation, reducing the risk of disruption to oil supply chains passing through critical transit routes such as the Strait of Hormuz.
Earlier concerns had centered on potential interruptions to Iranian-linked exports and broader instability in the Gulf region. However, renewed diplomatic optimism helped unwind part of the geopolitical risk premium built into crude prices in recent weeks.
Despite the price pullback, supply-side risks remain elevated.
Shipping data continues to show Iranian crude exports at their weakest level in six years, with significant volumes still constrained by maritime pressure and logistical bottlenecks.
Data from Vortexa indicates Iran exported an average of 209,000 barrels per day in May, down sharply from 1.34 million barrels per day in April, while Kpler estimated flows at around 260,000 barrels per day.
The collapse in shipments has left large volumes of crude stranded in regional waters, underscoring persistent structural constraints on Iranian exports even as broader geopolitical tensions fluctuate.
On the supply-demand balance, the Organization of the Petroleum Exporting Countries (OPEC) reaffirmed its outlook for global oil demand growth, projecting an increase of around 1.2 million barrels per day in 2026.
Prices also found partial support from U.S. inventory data showing a larger-than-expected draw.
The Energy Information Administration reported a decline of 8 million barrels in U.S. crude inventories for the week ending May 29, compared with analyst expectations of a 4 million-barrel drop.
The sharp reduction suggests tightening near-term supply conditions in the world’s largest oil consumer, even as global markets remain sensitive to geopolitical developments.
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