The prices of crude oil grades settled lower on Thursday after US President Donald Trump cancelled plans to strike Iran within hours, a move that raised expectations for a deal to end more than three months of war.
Brent futures fell by $2.72 or 2.9 per cent to quote at $90.38 a barrel, while the US West Texas Intermediate (WTI) crude futures decreased by $2.32 or 2.6 per cent to $87.71 a barrel.
President Trump, in a social media post, said he called off planned strikes on Iran because discussions have advanced to the highest levels of Iran’s leadership and a broad coalition of regional powers. However, he did not share details of the final points he said were approved by the coalition.
He had earlier threatened to seize Iran’s main oil export hub, Kharg Island, and assume total control of the country’s oil and gas markets, drawing a direct line to the US operation in Venezuela as a template for what could come next in Iran.
That came after a fresh round of US strikes on Wednesday rattled an already fragile ceasefire, with Iran responding by declaring the Strait of Hormuz closed and claiming hits on the US Fifth Fleet headquarters in Bahrain.
The American President has claimed multiple times that a deal with Iran is imminent, only to issue threats again when the oil-producing country does not agree to his demands.
On Wednesday, Iran announced the closure of the Strait of Hormuz, including for oil tankers and commercial ships, saying any vessel attempting to pass through would come under fire. The Strait of Hormuz, through which roughly 20 per cent of global energy flows, has been effectively closed since the war began, but in recent weeks, some friendly ships have passed through.
Data showed that three more LNG tankers have slipped out of the strait with their transponders off, heading to Asia, though the timing is unclear.
The Organisation of the Petroleum Exporting Countries (OPEC) is sticking to its view that the oil market will remain relatively tight through next year, with demand growth expected to continue outpacing non-OPEC+ supply additions despite months of war-related disruption and elevated prices.
According to OPEC’s June Monthly Oil Market Report released on Thursday, crude production averaged 33.13 million barrels per day in May, down 190,000 barrels per day from April based on secondary-source estimates.
The group left its global demand outlook largely unchanged, forecasting oil demand growth of 1.0 million barrels per day in 2026.
