The retreat followed a volatile period in which crude prices have been driven higher by concerns that continued fighting could threaten production, shipping routes and infrastructure across the Gulf. Reuters reported that oil had settled more than 1% higher on Wednesday as renewed US-Iran strikes intensified concerns over supply security.
Thursday's decline does not, however, signal that energy markets have discounted geopolitical risk. Instead, it reflects a more cautious assessment of how quickly physical supply could actually be disrupted.
The Strait of Hormuz remains central to that calculation. Two supertankers carrying Saudi crude were struck by unknown projectiles while travelling through the waterway earlier this week, highlighting the vulnerability of one of the world's most important energy corridors.
Any sustained disruption to shipping through the strait would have consequences well beyond the immediate parties to the conflict. Gulf producers rely heavily on maritime routes to reach international buyers, while Asian economies remain particularly exposed to imported crude.
Higher oil prices would also complicate the monetary policy outlook. Energy costs feed directly into inflation, creating an uncomfortable environment for central banks already balancing weaker economic activity against persistent price pressures.
The market is therefore confronting two competing forces. On one side is the possibility that geopolitical risk generates a substantial and prolonged supply shock. On the other is the possibility that production remains largely intact and the market gradually removes part of the conflict premium from crude prices.
The distinction matters for governments, companies and investors. Energy-intensive industries would face rising operating costs if crude remained elevated, while oil-producing economies could benefit from stronger revenues.
Aldrenor assessment: The decline in oil prices should not be interpreted as a return to normality. The market remains highly sensitive to developments around the Gulf, with shipping security, military escalation and the integrity of energy infrastructure now forming a single risk complex.
