Oil prices gave up some of their gains on Thursday as tankers continued to leave the Middle East despite escalating tensions and the widening conflict between the United States and Iran.
Brent crude futures fell $1.29, or 1.42%, to $89.45 a barrel by 01:10 GMT. U.S. West Texas Intermediate (WTI) crude declined 56 cents, or 0.66%, to $83.90 a barrel.
Brent settled 7.91% higher on Wednesday, while WTI gained 6.56%, marking one of the strongest rallies during the Iran war. The gains reversed a 5% decline on Tuesday following a temporary pause in hostilities between the United States and Iran.
Preliminary data showed that 39 commodity-carrying vessels passed through the Bab al-Mandab Strait into the Red Sea on Tuesday, the highest number since July 19, while only a few vessels transited the Strait of Hormuz.
“Despite the lower overall volumes, oil is still leaving the region through multiple routes, and additional alternative solutions are being explored,” IG market analyst Tony Sycamore said in a note. “The longer this situation persists, the more these alternative routes and methods will erode Iran’s leverage over the Strait of Hormuz.”
U.S. and Saudi strikes on Wednesday targeted Iran-backed groups in Iraq, marking the first time Saudi Arabia had joined U.S. airstrikes. The attacks came in response to drone strikes launched from Iraq against Saudi oil targets.
The strikes marked a resumption of U.S. military operations in the Middle East after President Donald Trump halted the bombing campaign earlier in the week amid dwindling ammunition supplies.
Iran said it had fired on military bases in the region and struck three oil tankers transiting the Strait of Hormuz via what it described as an unauthorized route.
Sources said Wednesday that Saudi Arabia was seeking to form a coalition to protect shipping in the Red Sea from Houthi attacks.
Source: Reuters
