Oil markets extended their recent decline on Thursday as sentiment continued to shift on easing geopolitical tensions, with traders increasingly pricing in reduced supply risk from the Middle East.
Brent crude fell to $96.41 per barrel, down 1.43% on the day, while extending its monthly decline of 12.25%, even though it remains 47.56% higher year-on-year, according to CFD-linked benchmark trading data. The move reflects a broader reassessment of risk premiums that had previously supported crude prices during heightened conflict concerns.
The latest weakness comes as diplomatic signals pointing to possible de-escalation in parts of the Middle East have cooled near-term bullish momentum. Reports of conditional ceasefire discussions involving Israel and Lebanon, alongside cautious optimism over potential Iran-related negotiations, have contributed to the shift in sentiment. However, there is still no confirmation that all parties have fully agreed to or implemented the proposed terms.
Despite the price decline, underlying supply conditions remain relatively tight. U.S. crude inventories have fallen for a sixth consecutive week, pushing stockpiles closer to minimum operating levels and suggesting continued resilience in demand fundamentals beneath the surface of the market.
At the same time, geopolitical risk has not fully dissipated. Recent exchanges of strikes between the United States and Iran, along with spillover concerns into parts of the Gulf region, continue to keep traders alert to the possibility of renewed escalation. This has prevented a sharper repricing of oil despite the recent pullback.
WTI crude also tracked the broader weakness, falling to around $95.30 per barrel, down about 1% on the day, as it moved in tandem with Brent and reflected the broader softening across the global benchmark complex.
Market participants are now navigating a more cautious environment where short-term diplomatic optimism is being weighed against persistent structural tightness and unresolved geopolitical risks.
