Oil Prices Retreat as Market Sees Through Trump's Rhetoric

Oil prices retreated on Thursday after surging in previous sessions due to escalating tensions in the Gulf. Despite rising fears of disruptions, Brent futures fell by $0.96 or 1.06% to $89.78 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped by $0.64 or 0.76% to $83.82.

The price spike was fueled by U.S. President Donald Trump's threats to hit Iran 'very hard' after an Iranian missile attack on a U.S. base in Jordan. However, market analyst Lin Ye from Rystad Energy suggests that the market has fully priced in this rhetoric and is now considering the possibility of Trump backing down.

According to Rystad Energy, around 13 million barrels per day of oil from the Gulf are still reaching markets despite Iran's closure of the Strait of Hormuz. Even after a naval blockade was imposed on Saudi Arabia by the Houthis in Yemen, some cargoes have continued to flow through alternative channels.

Market analyst Tony Sycamore notes that while overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. This situation is eroding Iran's leverage over the Strait of Hormuz, he said.