Oil prices settled lower on Thursday, July 16, but remained near their highest levels since mid-June amid escalating tensions between the U.S. and Iran. Brent crude futures fell $0.72, or about 0.9%, to settle at $84.23 a barrel, while U.S. West Texas Intermediate (WTI) futures dropped $0.65, or 0.8%, to close at $78.95 a barrel. Earlier in the session, both contracts had risen by more than 1%.
The decline followed a week of rising prices, with Brent futures reaching their highest level since June 12 and WTI at its highest since June 15. Analysts noted that the market was adjusting after a surge in prices earlier this week. Ed Hayden-Briffett, an oil research analyst, indicated that investor positioning had shifted as traders cut back on short positions after the recent rally.
Tensions have intensified as Iran has reportedly asked Yemen's Houthi movement to prepare to close the Red Sea oil export route in response to potential U.S. strikes on Iranian infrastructure. U.S. President Donald Trump reiterated threats to target Iranian power plants and bridges, raising concerns about the security of key oil export routes in the region. Alex Hodes, director of energy market strategy at StoneX, highlighted that the closure of both the Strait of Hormuz and the Red Sea route would significantly disrupt global oil supply.
The decline in oil prices could impact energy sector stocks and commodities linked to oil production and transportation. Investors may react to ongoing geopolitical risks that threaten supply stability in the Middle East. Watch for further developments in U.S.-Iran relations and any announcements regarding military actions, which could influence oil prices in the coming days.