WTI Slips as Middle East Ceasefire Eases Supply Fears

Key Moments

Ceasefire Agreement Pressures Crude After Rally

West Texas Intermediate (WTI) crude prices move lower during Thursday’s Asian session, trading around $92.70 per barrel after rising for three straight days. The pullback comes as a ceasefire deal between Israel and Lebanon boosts expectations for a wider diplomatic outcome related to the US-Israeli conflict with Iran, easing concerns over potential disruptions to global oil supply.

The agreement, announced in a joint statement following US-led discussions in Washington, stipulates a “complete cessation” of hostilities involving Iran-backed Hezbollah. As part of the arrangement, the two countries will establish “pilot security zones” overseen solely by the Lebanese armed forces, excluding non-state groups from those areas.

Geopolitical Risks Still Cloud Market Sentiment

Despite the ceasefire development, market confidence remains constrained by ongoing political tension and wider geopolitical uncertainty. The Wall Street Journal reported Thursday that US President Donald Trump told aides he would consider abandoning the ceasefire if Tehran kills US troops, while emphasizing that the multi-week pause in airstrikes remains intact.

In a separate interview with the New York Post, Trump indicated that a shipping blockade that extends until Labor Day is unlikely, but still within the realm of possibility. That stance effectively alters market expectations for when traffic through the key Strait of Hormuz might fully normalize.

Adding to the political backdrop, the Republican-controlled US House of Representatives on Wednesday approved a measure aimed at limiting President Trump’s authority to conduct military operations involving Iran. The resolution faces significant obstacles, including the need to overcome an anticipated presidential veto.

Inventory Draw Reinforces Tightness Narrative

Fresh data from the Energy Information Administration (EIA) show that US crude inventories fell by 8 million barrels last week to 433.7 million barrels. The decline was twice as large as the drop projected in a Reuters survey of analysts.

In response, Reuters cited Haitong Futures as saying that the rapid pace of global inventory drawdowns is likely to keep crude benchmarks challenging the upper end of their prevailing trading bands.