Crude oil prices fell on June 4 as the U.S. House of Representatives approved a resolution aimed at limiting President Donald Trump's authority to continue military action against Tehran.
Brent crude futures slipped 67 cents, or 0.69%, to $97.14 a barrel, while U.S. West Texas Intermediate crude fell 62 cents, or 0.65%, to $95.4 a barrel.
The decline in oil prices followed a strong rally in the previous session, driven by fresh tensions in the Middle East, including Iranian attacks on Kuwait and U.S. military strikes near the Strait of Hormuz. The resolution passed by the Republican-controlled House seeks to prevent further escalation, though it requires Senate approval and a two-thirds majority in both chambers to override a likely presidential veto.
“Contacts between Tehran and Washington remain open, though no headway has been made so far.”
Abbas Araqchi, Iranian Foreign Minister
President Trump indicated that negotiations with Iran could progress as early as this weekend. Iranian Foreign Minister Abbas Araqchi confirmed that contacts between Tehran and Washington remain open, although no significant progress has been made.
Analysts from Haitong Futures suggest that oil prices could move toward the upper end of their trading range due to a supply-demand imbalance and rapidly declining global crude inventories. However, they caution that even with a ceasefire, normalizing shipping activity through the Strait of Hormuz may take months.
Saudi Aramco CEO Amin Nasser warned that disruptions in the Strait of Hormuz could delay stability in global oil markets until 2027, potentially affecting nearly 100 million barrels of oil supply weekly. Morgan Stanley highlighted that stronger U.S. crude exports and weaker demand from China have so far mitigated the supply shock.
Background
The resolution by the U.S. House comes amid heightened tensions in the Middle East, with recent attacks and military strikes raising concerns over oil supply disruptions. The Strait of Hormuz is a critical chokepoint for global oil shipments, and any prolonged disruption could have significant implications for the global oil market.
The oil market remains in a precarious position, with potential disruptions in the Strait of Hormuz posing a significant risk to global supply. Market participants will closely monitor developments in U.S.-Iran negotiations and any changes in the geopolitical landscape that could impact oil prices.
