Oil eased 1% on profit-taking despite looming dual-strait closure threats

Global crude benchmarks slipped on Thursday as profit-taking and short-covering exhaustion interrupted a multi-day rally, though escalating threats to critical Middle Eastern transit chokepoints kept prices anchored near one-month highs.

The international Brent contract shed 72 cents (0.85%) to settle at $84.23 a barrel, while US WTI fell 65 cents (0.82%) to close at $78.95.

Both contracts retraced from intraday gains of over 1% as traders liquidated long positions following the multi-day surge to mid-June highs.

Immediate downward pressure stemmed from a technical deceleration in the market's recent short squeeze, alongside localized supply relief. Iraqi crude loadings more than doubled to average 1.2 million barrels per day (bpd) during the first half of July, bringing delayed physical volumes back online. Geopolitical anxiety also experienced transient relief after Tehran released a US citizen, offering a potential diplomatic valve to prevent total kinetic escalation.

However, structural supply risks maintain an elevated price floor. With traffic through the Strait of Hormuz already compromised, Tehran has directed Yemen’s Houthi movement to prepare for a blockade of the Bab el-Mandeb gateway—which transits 7.4 million bpd, or 7% of global supply—in the event of US strikes on Iranian domestic power infrastructure.

Written by: Aiman Haikal