West Texas Intermediate (WTI), the US crude oil benchmark, traded around $88.95 during early European hours on Thursday, retreating from a daily high as traders booked profits despite renewed US-Iran tensions [1]. The US launched a fresh round of military strikes against Iran, raising concerns that the conflict could disrupt energy supplies for an extended period [1]. According to US Central Command (CENTCOM), American forces initiated 'additional self-defense strikes against multiple targets in Iran at the commander in chief's direction,' citing Iran's 'unwarranted and continued aggression' [1]. Regional involvement increased as Bahrain, Jordan, and Kuwait reportedly intercepted Iranian missiles and drones aimed at US military facilities, according to Reuters [1].
US crude oil inventories continued their downward trend last week. The US Energy Information Administration (EIA) reported that crude oil stockpiles for the week ending June 5 declined by 7.228 million barrels, following a previous week's decline of 7.974 million barrels. This was significantly larger than the market consensus, which anticipated a decrease of 4.0 million barrels [1].
Despite the heightened geopolitical risks and substantial inventory drawdown, WTI prices tumbled below $89.00, suggesting that profit-taking and market uncertainty may be capping further upside in the near term [1]. The article notes that while the downside for oil may be limited due to ongoing tensions, the immediate price action reflects a cautious market response [1].
CONCLUSION
WTI crude oil prices dropped below $89.00 despite escalating US-Iran tensions and a sharp decline in US inventories, indicating a complex interplay between geopolitical risks and market profit-taking. The market remains cautious, with upside potential capped in the near term as traders weigh supply disruption risks against recent price movements.