Brent crude oil prices experienced a moderate pullback on Thursday, trading near $96 per barrel during the European session, down from a high of $98 on Wednesday. This movement followed the announcement of a ceasefire agreement between Israel and Lebanon, which provided some relief to the market but did not spark a strong positive reaction among investors. Despite the recent dip, Brent crude remains nearly 5% higher on the week, reflecting ongoing concerns about instability in the Middle East and the potential for disruptions to oil supply routes such as the Strait of Hormuz [1].
Investor sentiment remains cautious due to the worsening relationship between the US and Iran, particularly after recent hostilities and Iran's decision to suspend peace talks with Washington. These developments have tempered hopes for a swift resolution to the conflict and the reopening of key oil transit points, maintaining upward pressure on oil prices [1].
In the United States, the House of Representatives passed a resolution aimed at blocking President Donald Trump's war powers, though the measure is unlikely to become law unless it secures a two-thirds majority in both chambers to override a potential veto. This political maneuver adds another layer of uncertainty to the geopolitical landscape affecting oil markets [1].
On the supply side, the latest data from the Energy Information Agency (EIA) showed a significant decline in US crude oil inventories, with stocks dropping by 7.97 million barrels in the week of May 29. This drawdown was nearly double the expected 4 million barrel decrease and followed a 3.32 million barrel reduction the previous week. The rapid depletion of global oil reserves is preventing a sharper decline in prices, as concerns persist about a potential oil shortage if the Strait of Hormuz remains closed for an extended period [1].
CONCLUSION
Brent crude oil prices have eased following the Israel-Lebanon ceasefire, but market sentiment remains cautious due to ongoing US-Iran tensions and significant inventory drawdowns. The risk of supply disruptions continues to support prices, and investors are closely monitoring geopolitical developments for further direction.