Crude oil futures edged lower on Thursday, with Brent dropping 27 cents to $84.68 a barrel and WTI slipping 11 cents to $79.49.
The modest decline reflects a shift in market sentiment as traders recalibrate their exposure to geopolitical risk premiums following recent volatility.
The pullback comes after benchmarks retreated more than 1% on Wednesday, driven by growing speculation that diplomatic channels between the United States and Iran may yield a resolution to ongoing tensions.
The pullback comes after benchmarks retreated more than 1% on Wednesday, driven by growing speculation that diplomatic channels between the United States and Iran may yield a resolution to ongoing tensions.
Market participants appear to be pricing in a lower probability of immediate supply disruptions, particularly regarding Iranian exports and shipping routes in the Strait of Hormuz.
This repricing marks a continuation of the trend seen earlier in the week, where oil prices declined from sharp gains as the initial shock of renewed US-Iran tensions faded.
The market is now balancing the risk of potential supply constraints against the prospect of a negotiated settlement that would keep Iranian crude flowing.