Oil prices dipped on Thursday, with Brent crude settling at $81.29 per barrel, down 74 cents (0.9%), and U.S. West Texas Intermediate (WTI) crude falling $1.36 (1.7%) to $78.68. This followed significant gains on Wednesday, where Brent and WTI hit their highest levels since July. Prices were pressured by expectations that Yemen’s Houthi militia would halt Red Sea attacks, potentially easing regional tensions. These disruptions had previously forced costlier shipping routes. However, uncertainties remain as the Houthis pledged to monitor the Gaza ceasefire and resume attacks if breached.
The market also reacted to strong U.S. retail sales data, indicating robust economic demand, which initially fueled concerns of delayed Federal Reserve rate cuts. Later, dovish remarks from Fed Governor Christopher Waller, suggesting inflation could ease faster than expected, helped offset the bearish sentiment. Additionally, the Biden administration’s new sanctions on Russia targeting oil producers and tankers are being scrutinized. These sanctions have disrupted global oil flows, driving shipping rates higher. With President-elect Donald Trump set to take office, markets await his stance on sanctions and oil prices, which could renew tensions with OPEC+.