Global oil prices declined sharply on Thursday after the United States signaled it would not take immediate action against Iran, easing concerns over a potential supply disruption from the Middle East.

Brent crude futures fell by more than 4 percent, ending a five-day rally, as traders scaled back risk premiums linked to rising tensions in Iran. In recent days, markets had been unsettled by speculation that Washington could consider military intervention amid ongoing protests in the country.

Analysts noted that any escalation involving Iran typically raises fears of supply interruptions across the Persian Gulf, particularly through the Strait of Hormuz, a key shipping route that handles about 20 million barrels of oil per day. However, the lack of immediate US action has reduced those near-term risks.

Despite the price drop, market uncertainty remains elevated. Analysts say geopolitical risks have not disappeared entirely, keeping traders cautious in the short term. Still, the longer tensions persist without direct intervention, the more likely it is that underlying bearish fundamentals will weigh on prices.

At the same time, signs of tightness were observed in the physical oil market. The prompt Brent timespread held firm even as prices declined, suggesting short-term supply constraints.

This resilience was partly attributed to reduced oil flows from Kazakhstan through the CPC terminal.
Overall, analysts maintain a cautious outlook for oil markets, noting that while geopolitical fears have eased for now, broader supply and demand factors are likely to regain influence if tensions fail to escalate further.