Oil prices eased in early Asian trading on Thursday after Israel and Lebanon announced a ceasefire, with traders weighing whether the diplomatic opening could eventually feed into a wider U.S.-Iran understanding and, in time, ease pressure on supplies moving through the Strait of Hormuz.
Brent crude was changing hands at $96.60 a barrel, down 1.24%, while West Texas Intermediate slipped 1.10% to $94.96. The pullback followed a sharp rally earlier in the week, when both benchmar...
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ks rose by more than 5% as hopes of an imminent breakthrough faded and military activity resumed.
According to Axios, the ceasefire was brokered by the United States and hinges on Hezbollah halting attacks and withdrawing from areas south of the Litani River, while Israel and Lebanon continue negotiations over longer-term security arrangements. The joint statement leaves ultimate responsibility for future relations to the two governments, a formulation that suggests the deal is meant to reduce immediate risk rather than settle the broader conflict.
Even so, traders appear cautious about assuming that calmer rhetoric in Lebanon will translate into a meaningful shift in Hormuz, the narrow waterway that carries a substantial share of global oil trade. A previous U.S.-backed truce announced in April did not end the fighting, and exchanges of fire were still being reported on Wednesday despite the latest diplomatic push.
Political pressure is also building in Washington. The House of Representatives has approved a resolution aimed at curbing President Donald Trump’s authority to continue military action against Iran without congressional approval, although the measure is unlikely to advance in the Senate and would probably face a veto. Trump said on Wednesday that talks with Iran could make progress as soon as this weekend, while Iranian Foreign Minister Abbas Araqchi was more guarded, saying only that both sides were reviewing exchanged texts.
Recent events have done little to calm the wider confrontation. Axios reported that U.S. and Iranian forces clashed on Tuesday, with American strikes and interceptions following Iranian attacks across the region. That has reinforced market scepticism that any ceasefire announcement will immediately restore normal shipping conditions in the Gulf.
For now, the physical market remains tight. The U.S. Energy Information Administration said commercial crude inventories fell by 8 million barrels in the week to 29 May, leaving stockpiles at 433.7 million barrels. That drop suggests supply has already been under strain, even before any sustained disruption to Hormuz flows.
Analysts have noted that oil has so far been more resilient than many expected, with prices hovering near the mid-$90s despite repeated shocks. Some argue that traders have become conditioned to anticipate de-escalation after each surge in tensions. But the longer the Strait remains exposed to risk, the thinner the market’s buffer becomes, leaving prices vulnerable to a sharper move if diplomacy fails.
Source: Noah Wire Services
