Oil prices slipped on Thursday after posting sharp gains in the previous trading session. Although tensions in the Gulf continued to escalate, investors shifted their attention towards crude supply flows through key regional shipping routes.
Market participants closely monitored whether oil exports would continue despite ongoing geopolitical uncertainty. As a result, concerns over supply disruptions remained balanced by signs that crude was still reaching global markets.
Brent and WTI Crude Prices Decline
Brent crude futures fell 96 cents, or 1.06%, to $89.78 per barrel.
Meanwhile, US West Texas Intermediate (WTI) crude dropped 64 cents, or 0.76%, to $83.82 per barrel.
The decline followed a strong rally during the previous session. Brent had settled 7.91% higher, while WTI gained 6.56%.
Those gains reversed the sharp losses recorded a day earlier after a temporary pause in hostilities during the five-month Iran conflict.
Geopolitical Tensions Continue to Influence Markets
Oil prices surged after US President Donald Trump warned that the United States would hit Iran “very hard” following an Iranian missile attack on a US base in Jordan.
Meanwhile, the United States and Saudi Arabia carried out strikes against Iran-backed paramilitary forces in Iraq.
According to reports, it marked the first time Saudi Arabia had publicly joined US air strikes. The operation came in response to drone attacks on Saudi oil facilities launched from Iraq.
In addition, the US Central Command confirmed that American forces also conducted two hours of attacks on Iran on Wednesday. Those strikes ended a brief pause in US military operations that had begun over the weekend.
Investors Watch Supply Rather Than Headlines
Despite rising tensions, investors increasingly focused on crude supply rather than military developments.
“Trump’s ‘hit hard’ rhetoric caused the price spike immediately but looks like the market has fully priced (that) in and (is) considering the ‘TACO’ possibility right now,” said Lin Ye, vice president of commodity markets, oil, at Rystad Energy.
The analyst explained that markets have recently followed a familiar pattern.
According to Lin Ye, geopolitical headlines often trigger sharp price increases. However, those gains usually fade as actual oil supplies and diplomatic developments become the main market drivers.
Oil Continues to Reach Global Markets
Oil prices also remained under pressure because crude exports from the Gulf continued despite major disruptions.
Although the Strait of Hormuz has been nearly shut after Iran closed the waterway following the US-Israeli war, oil is still reaching international buyers through alternative routes.
Rystad Energy estimates that around 13 million barrels of Gulf oil per day continue to enter global markets.
Meanwhile, the Iran-aligned Houthis in Yemen imposed a naval blockade on Saudi Arabia in the Red Sea on July 20, disrupting shipping through the Bab el-Mandeb Strait.
Even so, some shipments, particularly those linked to Chinese tankers, have continued to move.
“While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran’s leverage over the Strait of Hormuz,” IG market analyst Tony Sycamore said in a note.
Market Awaits Fresh Supply Signals
Investors are expected to keep monitoring crude supply routes alongside geopolitical developments.
While military tensions continue to influence prices, market sentiment increasingly depends on whether oil continues flowing through alternative channels.
As long as supply remains available, analysts believe sharp price spikes could prove temporary despite ongoing instability across the Gulf region.
