Brent crude futures fell 0.29% to $84.70 as markets weighed geopolitical tensions against cooling demand signals. Despite US strikes in the Persian Gulf and a 1.7 million barrel decline in US crude inventories, prices remained under pressure on Thursday.
Crude oil futures experienced a marginal decline in global trade on Thursday, even as military tensions escalated in the Middle East. September Brent crude futures traded at $84.70 per barrel, a drop of 0.29%, while West Texas Intermediate (WTI) August futures eased 0.19% to $79.45. In contrast to global trends, August crude oil futures on India's Multi Commodity Exchange (MCX) opened higher at ₹7,652, gaining 0.55% over the previous close of ₹7,610.
Geopolitical Impact on Supply Routes
The price movement follows precision strikes conducted by US forces on Iranian command centers, air defense sites, and missile infrastructure, including locations near Bandar Abbas and Greater Tunb Island. These operations were intended to protect commercial vessel transit through the Strait of Hormuz, a vital artery for global energy supplies. Despite the military action, market participants appear focused on broader demand-supply dynamics rather than immediate supply disruptions. Analysts at ING have highlighted that while tanker traffic through the Strait of Hormuz faces significant pressure, the market is bracing for the end of global Strategic Petroleum Reserve (SPR) releases, which could tighten supply availability in the coming weeks.
US Inventory Trends and Market Sentiment
Official data from the US Energy Information Administration (EIA) for the week ending July 10 showed a drawdown of 1.7 million barrels in commercial crude oil stocks, bringing total levels to 409.7 million barrels. This inventory figure remains approximately 6% below the five-year seasonal average, suggesting a tightening market. However, gasoline inventories also decreased by 1.5 million barrels, while distillate fuel inventories rose by 4.6 million barrels.
For investors, the recent discrepancy between inventory drawdowns and price stability suggests that demand concerns may be offsetting fears of supply shocks. While consumption of gasoline and distillates has shown signs of decline, the overall product supplied in the US has registered a modest year-on-year increase of 0.3%. The key monitorable for the energy market in the near term will be whether the combination of geopolitical risk and low inventory levels can sustain price support if global demand signals remain weak.