Oil Prices Slip

Even as U.S.-Iran Tensions Escalate

Report By Y-Trendz

July 9, 2026 — Oil prices fell on Thursday even as the United States and Iran exchanged military strikes for a second consecutive day, with traders betting that the latest flare-up in hostilities would

remain contained rather than spiral into a broader war that could disrupt regional energy supplies.

Brent crude futures, the international benchmark, dropped 2.2% to close at $76.30 a barrel, after touching an intraday high of $79.25 earlier in the session. West Texas Intermediate crude lost about 2% to settle near $72.08 a barrel. The declines came a day after Brent had surged more than 5%, its sharpest single-day gain since June 1, following President Donald Trump's announcement that the ceasefire with Iran was effectively over.

Markets Bet on Contained Conflict

The pullback reflected a broader market view that despite renewed fighting, both Washington and Tehran have strong incentives to avoid a full-scale war that could take Gulf energy infrastructure offline. Traders drew reassurance from the fact that US strikes — which hit roughly 90 targets in Iran overnight — avoided Iranian energy infrastructure directly, and from Trump's own comments suggesting he did not expect a return to full-scale conflict.

"The tone overnight was somewhat less escalatory, the strikes appeared relatively contained," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group, in comments reported by Rigzone.

Analysts at Macquarie Group struck a similar note, with strategist Vikas Dwivedi and colleagues writing that they expect the renewed tension between the US and Iran to be relatively short-lived, while cautioning that buying into price rallies still carried unfavorable risk-reward.

Citibank analysts told clients they expect Washington and Tehran to return to negotiations within the next couple of weeks, arguing that both sides have too much to lose from an escalation that leads to the destruction of regional energy infrastructure. "On the US side, President Trump has shown an affinity to strong equity prices, and stable bond markets, so this is the basis for our view he will return to negotiating in relatively short order," the Citi analysts said, according to CNBC.

Mediation Efforts Continue

Qatar and Pakistan, which have served as intermediaries between the two governments throughout the conflict, were reported to be working to bring Washington and Tehran back to the negotiating table. Iran responded to the latest US strikes by firing missiles and drones at American assets in Bahrain, Kuwait, Qatar and Jordan, according to Iranian state media, further rattling markets before prices ultimately eased.

The US also revoked a general license that had permitted Iranian oil sales, a move that intensified economic pressure on Tehran even as it raised fresh questions about global crude supply. Saudi Arabia, meanwhile, moved to cut oil prices for Asian buyers, a step seen as designed to ensure that millions of barrels would be absorbed quickly amid the supply uncertainty. "The market has become accustomed to the tensions and the disruptions in the Strait of Hormuz," said Swissquote senior analyst Ipek Ozkardeskaya, per The National.

The Strait of Hormuz Remains the Key Variable

The Strait of Hormuz — the narrow waterway through which roughly a fifth of global oil and gas supplies passed before the war — has remained the central variable driving price swings. Visible shipping traffic through the strait was severely restricted on Thursday, though analysts noted that a significant share of vessel movement may simply be going dark, appearing only later once satellite imagery becomes available.

Goldman Sachs Group has said that Iran's willingness to allow vessels to keep moving through the strait, rather than overall shipping capacity, remains the primary constraint on a swift recovery in Hormuz volumes, and warned that continued disruptions could slow a broader production recovery in the region.

Dubai-based MUFG analyst Soojin Kim said the trajectory of the US-Iran conflict, the security of shipping through Hormuz, and the scale of any disruption to Gulf oil exports will remain the central drivers of oil prices going forward, adding that further escalation would likely restore a larger geopolitical risk premium to crude.

Brent had earlier fallen last week to below its pre-war level of $72.87 amid a brief easing of tensions and concerns about a supply surplus, before this week's renewed fighting sent prices swinging sharply in both directions.

Sources

• Crude Slides on Easing Tensions — Rigzone
• Oil prices fall 2% as mediators try to prevent U.S. and Iran from returning to war — CNBC
• Oil prices drop on assumptions US-Iran war will not resume despite hostilities — The National
• Oil prices fall to levels not seen since start of US-Israel war on Iran — Al Jazeera