Global oil prices tumbled early Thursday, paring gains from the previous session as emerging hopes for diplomatic peace negotiations alleviated immediate fears of escalating supply disruptions across the Middle East.
International benchmark Brent crude futures dropped $1.22, or 1.1%, to $114.10 a barrel by 0351 GMT. Concurrently, U.S. West Texas Intermediate (WTI) crude declined $1.33, or 1.3%, to $101.45.
The pullback follows a sharp rally on Wednesday, when Brent gained 1.3% and WTI jumped 3% amid growing anxieties surrounding critical transit points like the Strait of Hormuz. Early Asian trading reversed those gains as market participants reassessed geopolitical risk premiums.
Diplomatic efforts involving regional and international stakeholders have provided temporary market relief. Discussions between high-level officials have sparked optimism for a potential de-escalation, dampening speculative buying that previously drove prices toward multi-month highs.
However, energy analysts warn that structural supply tightness limits further downside. Global commodity markets face persistent pressure, with the World Bank recently forecasting energy costs could surge up to 32% this year due to compounded Middle Eastern trade bottlenecks and depleted distillate inventories.
Physical supply constraints continue to support elevated price floors. Despite OPEC+ expanding production targets, ongoing transit security risks leave actual export deliveries below official quotas, keeping physical markets tight.
Traders now await further geopolitical clarity and upcoming U.S. inventory data to gauge whether diplomatic progress will deliver lasting stability or give way to renewed price volatility.
