Crude Oil Extends Decline as Middle East Tensions Show Signs of Easing

Crude oil prices fell for a third consecutive session on Thursday as easing geopolitical tensions in the Middle East and signs of progress in indirect negotiations between the United States and Iran reduced concerns over potential supply disruptions.

Brent crude oil, the international benchmark for Nigerian crude oil, dropped to around $70.33 per barrel, while U.S. West Texas Intermediate (WTI) crude traded near $67.20 per barrel with both benchmarks touching their lowest levels since February.

The decline extends a broader selloff that has erased much of the risk premium built into oil prices during the height of regional tensions.

Market sentiment improved after Qatari officials said indirect talks between Washington and Tehran had achieved positive progress on issues linked to the temporary agreement that ended hostilities in June.

Although negotiators did not announce a comprehensive breakthrough, investors interpreted the discussions as a step toward reducing the likelihood of further disruptions to global energy supplies.

The recovery in shipping activity through the Strait of Hormuz, one of the world’s most important energy transit routes, also weighed on prices.

Tankers have increasingly resumed operations through the strategic waterway, easing concerns over the movement of crude exports from the Gulf region.

Additional pressure came from expectations of stronger global supply. Saudi Arabia has increased crude exports as shipping conditions improved, while market participants expect higher availability of oil from the region if diplomatic efforts continue to reduce tensions.

The improved supply outlook prompted UBS to lower its oil price forecasts for 2026 and 2027, citing recovering crude flows through the Strait of Hormuz and a more balanced global market.

The investment bank said improving shipping activity has reduced the probability of prolonged supply shortages that previously supported higher prices.

Beyond geopolitical developments, traders continue to monitor global demand trends, particularly in China, where slower economic activity has moderated fuel consumption growth.

Together with expectations of higher supply, softer demand has contributed to renewed downward pressure on crude prices.

Despite the recent decline, analysts caution that oil markets remain sensitive to developments in the Middle East. While diplomatic engagement has helped calm investor fears, any deterioration in negotiations or renewed disruptions to shipping through the Strait of Hormuz could quickly reverse the current price trend.

For now, however, improving supply prospects and easing geopolitical uncertainty have shifted market focus away from immediate supply risks, allowing crude oil prices to retreat from the elevated levels recorded earlier this year.