Oil Prices Slip as Markets Assess Fresh US-Iran Military Tensions

Oil prices edged lower on Thursday as investors assessed the risk that renewed military clashes between the United States and Iran could disrupt crude supplies from the Middle East.

Brent crude futures fell 59 cents, or 0.62%, to $95.04 a barrel at 8:09 a.m. Saudi time. US West Texas Intermediate crude was down 38 cents, or 0.42%, at $90.63 a barrel.

The latest attacks marked the most significant exchange of fire between the US and Iran since July, with the conflict now entering its seventh month. The renewed violence has raised concerns about the security of oil shipments through the Strait of Hormuz, one of the world’s most important energy routes.

Both major oil benchmarks experienced sharp swings during the previous session. Brent and WTI moved between gains of as much as $2 a barrel and losses of about $1. Their session highs were the highest recorded since July 24.

Prices later eased as there were tentative indications that the latest escalation could be losing momentum. IG analyst Tony Sycamore said there had been no confirmed exchange of fire since around midday on Wednesday, Sydney time.

US President Donald Trump said Wednesday that the renewed American campaign against Iran would not continue for “too long.” He said US forces had targeted Iranian radar and missile systems.

“We took out all of the new equipment that they tried to build along the Strait of Hormuz,” Trump said, describing the operation as a heavy attack and warning that US forces were prepared to strike again.

Sycamore said the easing of tensions could allow oil movements through the Strait to recover, although he stressed that such an outcome remained uncertain.

Preliminary data from Kpler showed that only four commodity vessels transited the Strait of Hormuz on Wednesday, compared with a 10-day average of around 13 vessels.

Iran has also expanded its list of ships it considers non-compliant, warning that vessels attempting to pass through the waterway could face fines, confiscation or detention.

Meanwhile, Iraq significantly increased its oil exports in August. Two Iraqi energy officials said exports reached around 2.34 million barrels per day, up from approximately 1.35 million bpd in July. September shipments are also expected to rise as heavy discounts and Iranian approvals for Iraqi tankers encourage buyers.

The United States said 17 million barrels of oil passed through the Strait of Hormuz on Monday, describing it as the largest volume of crude to move through the waterway since the US-Israeli war with Iran began.

Markets are expected to remain highly sensitive to developments around the Strait, with any renewed escalation likely to increase concerns about global oil supplies and push prices higher.