Key Takeaways

• Oil eases: Brent fell 1% to $96.87 per barrel, while WTI dropped 0.8% to $95.22 — snapping a three-session rally.
• Prior session’s gains: Both benchmarks had risen nearly 2% Wednesday to their highest levels in over a week.
• Israel-Lebanon ceasefire: The U.S. announced Wednesday evening that Israel and Lebanon agreed to implement a ceasefire, contingent on Hezbollah halting hostilities.
• Broader Middle East risks remain: Iranian missile attacks on Kuwait and Bahrain plus U.S. strikes on Qeshm Island this week keep tensions elevated.
• Trump’s nuclear claim: The president said in a podcast that Iran had agreed not to pursue a nuclear weapon — raising hopes for diplomatic progress.
• U.S.-Iran talks show little progress: Washington and Tehran remain deadlocked, with concerns the conflict could drag on further.
• ING warning: “Every day that passes without a resumption of oil flows leaves the market increasingly vulnerable. This increases the pressure to strike a deal.”
• EIA inventory shock: U.S. crude stockpiles fell 8 million barrels last week — nearly triple the 3 million expected.
• Record-high U.S. exports: U.S. crude exports climbed to 5.9 million barrels per day as Europe and Asia sought alternatives to Middle East supplies.
• Global inventory alarm: The EIA estimates global stockpiles are drawing down rapidly and could hit critical levels ahead of peak summer demand.
• Seasonal pace exceeded: ING noted inventories are falling faster than typical seasonal patterns.

Oil prices edged lower during Asian trading on Thursday, snapping a three-session rally, as investors locked in profits after recent gains while continuing to assess escalating tensions in the Middle East and signs of tightening U.S. crude supplies.

Brent oil futures expiring in August slipped 1% to $96.87 a barrel by 01:54 ET (05:54 GMT), while U.S. West Texas Intermediate (WTI) crude futures fell 0.8% to $95.22 a barrel.

The pullback followed gains of nearly 2% in the previous session that had lifted both benchmarks to their highest levels in more than a week.

U.S. and Lebanon Agree to Ceasefire; Broader Risks Remain

The market remained focused on the conflict involving the United States and Iran, which has injected a sizeable geopolitical risk premium into oil prices.

Fresh hostilities this week included reported Iranian missile attacks on Kuwait and Bahrain, and U.S. strikes on Iran’s Qeshm Island near the Strait of Hormuz. At the same time, Israeli forces expanded military operations in southern Lebanon, targeting Hezbollah-controlled areas.

The U.S. said on Wednesday evening that Israel and Lebanon had agreed to implement a ceasefire deal, although the agreement depends on Hezbollah halting its hostilities.

Diplomatic efforts between Washington and Tehran have shown little progress, raising concerns that the conflict could drag on and further disrupt regional energy supplies.

However, some concerns were tempered after U.S. President Donald Trump said in a podcast interview that Iran had agreed not to pursue a nuclear weapon — raising hopes for a diplomatic breakthrough.

Investors are also closely monitoring developments around the Strait of Hormuz, a key shipping route for global crude exports.

“Every day that passes without a resumption of oil flows leaves the market increasingly vulnerable. This increases the pressure to strike a deal,” ING analysts said in a research note.

U.S. Crude Stocks Drop Sharply Above Estimates

Limiting losses, however, was a much larger-than-expected drawdown in U.S. crude inventories. Data from the Energy Information Administration showed crude stockpiles fell by 8 million barrels in the week ended May 29 — against analysts’ expectations for a decline of about 3 million barrels.

“While inventories do fall seasonally as refiners ramp up operating rates, the pace of decline has been faster than usual,” ING analysts added.

U.S. crude exports climbed to 5.9 million barrels per day — one of the highest levels on record — as buyers in Europe and Asia sought alternative supplies amid disruptions linked to the Middle East conflict.

Broader supply concerns continue to underpin prices. The EIA estimates that global oil inventories are drawing down rapidly and could hit critical levels ahead of peak summer demand if the trend continues.