Oil prices eased in Asian markets on Thursday, ending a three-day climb as some investors took profits while remaining alert to an elevated geopolitical risk premium tied to the Middle East and fresh data pointing to tighter U.S. crude supplies.
Brent futures for August delivery declined about 0.7% to around $97.16 a barrel by 20:11 ET (00:11 GMT), while U.S. West Texas Intermediate (WTI) contracts were down roughly 0.8% to near $95.30 a barrel.
The retreat followed nearly 2% gains in the previous session that had pushed both benchmarks to levels not seen in more than a week. Traders described the movement as a period of profit-taking after the earlier rally, even as drivers supporting prices remained in place.
Geopolitical developments
Market participants continued to monitor a string of recent hostilities linked to the conflict between the United States and Iran, which has introduced a significant geopolitical component to oil valuations. Reports this week cited Iranian missile strikes on Kuwait and Bahrain, and U.S. counterstrikes on Iran's Qeshm Island near the Strait of Hormuz. At the same time, Israeli forces widened operations in southern Lebanon and targeted areas under Hezbollah control in recent days.
Diplomatic activity has produced limited progress. The U.S. stated on Wednesday evening that Israel and Lebanon had agreed to implement a ceasefire arrangement, but that implementation is conditional on Hezbollah ceasing hostilities. Broader talks between Washington and Tehran have shown little forward movement, leaving market participants concerned that tensions could persist and risk further disruption to regional energy flows.
Separately, statements by U.S. President Donald Trump in a podcast interview - indicating that Iran had agreed not to pursue a nuclear weapon - tempered some immediate fears and raised the possibility of diplomatic movement, though observers characterized progress as uncertain.
Supply-side signals and inventories
Monitoring of the Strait of Hormuz, a crucial shipping corridor for global crude exports, remained a focal point for traders assessing physical supply risk. Offsetting some of the price fall, however, was a notably larger-than-anticipated decline in U.S. crude stocks. Energy Information Administration data showed U.S. crude inventories dropped by 8 million barrels in the week ended May 29, versus analyst expectations for about a 3 million-barrel decrease.
U.S. crude exports rose to 5.9 million barrels per day, reaching one of the highest recorded levels as European and Asian buyers sought alternate supplies amid Middle East disruptions. The combination of hefty export volumes and the sizeable inventory draw helped limit downside price movement.
The EIA also signaled broader supply concerns, estimating that global oil inventories were drawing down rapidly and could reach critical levels ahead of peak summer demand if current trends persist. That assessment continues to provide underlying support to prices despite short-term profit-taking.
Market context
In sum, the market entered Thursday with mixed impulses: profit-taking after recent gains, persistent geopolitical risks tied to flare-ups across the Gulf region and Lebanon, and inventory metrics indicating tighter U.S. crude availability and elevated export activity. Traders and market watchers remain focused on developments in the Strait of Hormuz and on any diplomatic shifts that might ease or exacerbate regional tensions.