A sharp reversal
Crude gave back a chunk of this week's war premium on Thursday. WTI dropped 3.95% to $92.37 a barrel, and Brent settled at $94.85, down 3.12%. Only three days ago, oil jumped 5% after Iran walked away from talks and threatened to seal the Strait of Hormuz. The mood has flipped.
The trigger was a ceasefire between Israel and Lebanon. President Trump said Hezbollah had committed to halting its strikes on Israel, and Israeli Prime Minister Benjamin Netanyahu signaled his troops would hold their lines rather than move further into Lebanon. Traders treated the deal as a sign the wider regional conflict might finally be cooling, and they started selling the risk premium that has lived in oil since March.
Iran talks back in play
Washington and Tehran also looked closer to talking again. Trump suggested a breakthrough could arrive within days, perhaps over the weekend, while Iranian Foreign Minister Abbas Araqchi said the two governments were still in contact. Araqchi added a caveat, though: nothing concrete has been settled yet, and the sides remain far apart over Tehran's frozen assets abroad and its nuclear program.
There was a political nudge in Washington too. The House passed a resolution limiting the president's ability to strike Iran without congressional sign-off, which the market read as pressure to keep the standoff diplomatic.
The bullish case hasn't gone away
Falling prices sit awkwardly next to the supply picture. The U.S. Energy Information Administration reported that crude stockpiles fell by 8 million barrels in the week to May 29, landing at 433.7 million. That made six straight weekly draws, and the drop ran far deeper than the roughly 4-million-barrel decline analysts had penciled in. Demand, by that measure, is anything but weak.
The Strait of Hormuz is not back to normal either. Officials hinted that a deal to reopen the waterway could land within a week, but tanker traffic is still a trickle next to the pre-war flow. Sasha Foss of CSC Commodities cautioned that if the ceasefire frays and the strait stays shut, oil could still spike toward $150.
Gas goes the other way
Natural gas refused to follow oil down. The U.S. benchmark rose 3.6% to $3.33 per MMBtu, the day's biggest gainer, as the squeeze on global LNG keeps a floor under prices. With Qatari cargoes still disrupted, the gas market is reading the Middle East very differently from crude.
What to watch
Oil now trades more than 20% below its March peak near $120. The next leg hinges on two things: whether the weekend produces an actual U.S.-Iran framework, and whether tankers genuinely start moving through Hormuz again. Get both, and the war premium keeps draining out. Stall on either, and Thursday's selloff could reverse as fast as it arrived.