Oil prices relinquished a portion of their recent gains on Thursday, as oil tankers persisted in their departures from the Middle East, despite the intensifying tensions in the region, with the U.S.-Iran conflict extending beyond its primary battlegrounds. Brent futures declined by $1.29, representing a decrease of 1.42%, settling at $89.45 per barrel as of 0110. U.S. West Texas Intermediate crude declined by 56 cents, representing a decrease of 0.66%, settling at $83.90 per barrel. Brent experienced a rise of 7.91% in the last session, while WTI increased by 6.56%, marking one of the most significant surges during the Iran war. This followed a 5% decline on Tuesday, which occurred after a temporary cessation of hostilities in the ongoing five-month conflict.

On Tuesday, thirty-nine commodity ships navigated through the Bab el-Mandeb strait into the Red Sea, marking the highest volume since July 19. In contrast, only a limited number of vessels transited through the Strait of Hormuz, according to preliminary shipping data. “While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, ⁠the more ‌these alternative routes and methods will erode Iran’s leverage over the Strait of Hormuz,” according to analyst Tony Sycamore in a note. The Strait of Hormuz stands as the preeminent oil shipping route globally, facilitating the transit of approximately one-fifth of the world’s oil and gas flows in the past.

Since the onset of the U.S.-Iran war in February, the passage of ships through the strait has been predominantly obstructed, notwithstanding attempts to achieve a diplomatic resolution. Iran has dismissed an Omani proposal for regional joint management of the strait, according to a senior Iranian official on Wednesday. On Wednesday, U.S. and Saudi strikes targeted Iran-backed paramilitary forces in Iraq, marking the first instance of Saudi Arabia publicly participating in U.S. air strikes. This action was a response to drone attacks on Saudi oil facilities that originated from Iraq. That marked the resumption of U.S. strikes in the Middle East, following President Donald Trump’s decision to call off a bombing campaign over the weekend due to dwindling munitions.

Iran also reported that it had targeted U.S. bases in Jordan and attacked three tankers navigating the Strait of Hormuz via what it described as an unauthorised route. Sources indicated on Wednesday that Saudi Arabia was pursuing the formation of a coalition aimed at safeguarding Red Sea shipping from Houthi assaults. The Iran-backed group in Yemen announced on July 20 its intention to impose a naval blockade on Saudi Arabia in the Red Sea. This move signifies an escalation in attacks on tankers and represents the opening of a new front in the ongoing conflict involving Iran, aimed at disrupting shipping activities in the Bab el-Mandeb strait, which is recognised as the second most crucial oil shipping channel.