Oil prices slipped slightly on Wednesday after a three-day rally, with Brent crude hovering around $106 to $108 a barrel, last trading at $107.03, down 0.69 percent, as traders balanced easing momentum against ongoing supply risks from the Middle East.
The decline comes even as the market remains under pressure from continued disruption in the Strait of Hormuz, a key global shipping route, where tensions linked to the US–Iran conflict are still affecting flows of crude and fuel.
Diplomatic efforts to stabilise the situation have yet to deliver clear progress, and the ceasefire remains fragile. Traders say this uncertainty is still the main force keeping oil prices elevated, even when short-term pullbacks occur.
On the demand side, investors are also watching global political and economic signals, including a planned meeting between US President Donald Trump and Chinese President Xi Jinping. However, energy traders say geopolitics remains the dominant driver of price movement for now.
Despite Wednesday’s dip, Brent crude remains significantly higher than both last month and last year, up about 12.91% over the past month and nearly 61.94% year-on-year, reflecting a market still pricing in supply risk rather than normal conditions.
In the background, rising energy costs are also feeding into inflation pressures in major economies, particularly the United States, where April data showed stronger-than-expected price increases.
For now, analysts expect oil to remain volatile, with prices reacting sharply to any new developments from the Middle East rather than steady fundamentals.
