Oil prices softened on Thursday after news that Israel and Lebanon would implement a ceasefire helped underpin expectations of a wider reduction in regional tensions related to Iran. The move coincided with developments in Washington that could limit U.S. military action, and with fresh supply data showing a sizable draw in U.S. crude stocks.
Brent futures were trading down 67 cents, or 0.69%, at $97.14 a barrel by 0015 GMT, while U.S. West Texas Intermediate crude slipped 62 cents, or 0.65%, to $95.40. Both contracts had climbed roughly 2% the previous day, extending gains recorded after a fresh bout of Middle Eastern hostilities that included Iranian attacks on Kuwait and U.S. military strikes near the Strait of Hormuz.
In Washington, the Republican-led U.S. House of Representatives approved a resolution aimed at preventing President Donald Trump from continuing military action against Iran. For the measure to take effect it would need approval in the Senate and then two-thirds majorities in both chambers to override what the article describes as an almost certain presidential veto.
President Trump suggested there could be movement in negotiations with Iran as soon as the coming weekend. Iranian Foreign Minister Abbas Araqchi was quoted as saying Tehrans contacts with Washington were not cut off, but that no progress had been made in the talks; he added both sides were reviewing exchanged texts.
Against this geopolitical backdrop, U.S. crude inventories fell by 8 million barrels to 433.7 million barrels in the week ended May 29, the Energy Information Administration reported on Wednesday. That draw was larger than the 4-million-barrel decline many analysts expected in a Reuters poll, reinforcing supply-side tightness.
Market commentary cited in the article noted expectations that oil could trend toward the upper end of its trading range due to a persistent supply-demand imbalance as global crude inventories continue to fall rapidly. Traders and analysts have been balancing those supply signals with shifting assessments of geopolitical risk tied to the conflicts and diplomatic contacts described above.
Summary
Oil moderated after an Israel-Lebanon ceasefire raised hopes for broader de-escalation associated with Iran, even as U.S. crude stocks showed a larger-than-expected weekly draw and Washington moved to limit the presidents unilateral war powers.
Key points
- Brent fell to $97.14 a barrel and WTI to $95.40, reversing some of the prior sessions gains.
- U.S. House approved a resolution to curb presidential war powers regarding Iran - action would need Senate approval and two-thirds majorities to override a likely veto.
- U.S. crude inventories dropped by 8 million barrels to 433.7 million in the week to May 29, exceeding expectations for a 4-million-barrel draw.
Risks and uncertainties
- Diplomatic talks show limited progress - Iranian officials said contacts with Washington continue but that no negotiation progress had been made, leaving outcomes uncertain (impacts oil and geopolitical risk premiums).
- Legislative constraints on military action require further Senate approval and veto-override thresholds, meaning U.S. congressional moves may not immediately change on-the-ground risk (impacts political risk assessment for markets).
- Supply-demand balance remains tight as inventories fall rapidly - analysts warned this could push prices toward the top of their range if the draw continues (impacts energy markets and refining margins).
The market reaction combined immediate inventory data with evolving political signals. Traders balanced the sizable U.S. stock draw against signs of potential diplomatic progress and congressional efforts to limit military escalation. Together, those elements kept oil markets attentive to both short-term supply indicators and the trajectory of regional and diplomatic developments.