Oil prices steady as investors assess US-Iran war outlook

Oil prices stabilized in early Thursday trading as investors weighed the implications of the U.S.-Iran conflict on the security of vital shipping lanes, particularly the Strait of Hormuz. Brent crude futures for October delivery saw a modest increase, while U.S. West Texas Intermediate (WTI) crude futures experienced a slight dip.

Both major benchmarks had previously closed higher for a fourth consecutive session on Wednesday, reaching their highest levels since late July. The market's upward momentum is being sustained by sporadic incidents in the Middle East, though a lack of significant escalation is preventing a stronger rally, according to market analysts.

"Oil prices remained elevated as the market is supported by sporadic attacks in the Middle East but lacks fresh momentum without a major escalation," noted Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment. He anticipates a gradual upward trend due to persistent uncertainty over peace talks and ongoing tensions involving Iran and neighboring Gulf Arab states.

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Oil prices remained elevated as the market is supported by sporadic attacks in the Middle East but lacks fresh momentum without a major escalation.

Recent developments, such as the UAE's suspension of financial transactions with Iran, have refocused attention on the strained relations between the two nations. While U.S. President Donald Trump stated that no talks with Iran were underway and affirmed the Strait of Hormuz remained open, Iran maintained that the waterway was closed. Data indicated a slowdown in shipping through the Strait, as vessel owners opted to avoid the passage due to unclear signals regarding its reopening after a blockade during the Iran war.

In the United States, crude and gasoline inventories unexpectedly rose last week, while distillate stockpiles decreased, according to the Energy Information Administration. Crude inventories increased by 4.4 million barrels for the week ending August 14, contrary to expectations of a decline.

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The market is likely to maintain a gradual upward trend given uncertainty over peace talks and tensions involving the United Arab Emirates, Oman and Iran.