Oil prices eased on Thursday but remained near one-month highs as escalating tensions in the Middle East continued to support a geopolitical risk premium. Brent crude fell 72 cents to settle at $84.23 per barrel, while West Texas Intermediate (WTI) fell 65 cents to $78.95 per barrel after both benchmarks briefly traded higher during the session.
Markets remained focused on the growing risk of supply disruptions after reports indicated Iran is preparing additional contingency measures that could threaten another major regional shipping route beyond the Strait of Hormuz. Any disruption to both the Strait of Hormuz and the Bab el-Mandeb would significantly impact global crude exports, increase tanker shortages, and drive shipping and insurance costs higher.
Shipping activity through the Strait of Hormuz remained well below normal levels following renewed military action between the United States and Iran. Vessel traffic declined further after the United States reinstated maritime restrictions, highlighting the continued challenges facing Gulf crude exports despite recent efforts to restore regional energy flows.
Offsetting some of the geopolitical support, Iraqi crude exports accelerated during the first half of July as shipments recovered after months of constrained flows, providing additional supply to the global market. Investors also viewed limited diplomatic developments between the United States and Iran as a potential sign that broader escalation may still be avoided, helping to temper further gains in crude prices.