Oil extends decline as improving Gulf supply weighs on prices

Crude oil prices extended losses on Thursday, returning toward the levels seen before the start of the tensions in the Middle East.

Continued progress in diplomatic efforts between the United States and Iran has strengthened expectations that supply conditions will improve.

The gradual recovery in shipping activity through the Strait of Hormuz has reinforced this shift in sentiment. The opening of alternative navigation routes has also helped improve confidence that energy exports from the region will continue to normalise.

However, the physical market’s tightness could support prices to some extent, with U.S. crude inventories posting a ninth consecutive weekly decline.

Looking ahead, continued progress in negotiations could maintain downward pressure on oil prices as supply prospects improve. Nevertheless, any setback in diplomatic efforts or renewed disruption to maritime traffic could quickly restore volatility and reverse the recent decline in crude markets.