Hope that U.S./Iran hostilities might be resolved also drove prices downward: File Image/Pixabay

News of falling demand from the International Energy Agency along with a possible resolution to the U.S./Iran conflict caused oil prices to drop substantially on Thursday – even though both issues were far from being settled.

Brent ended Thursday's session down $1.88 to $67.52 per barrel, while West Texas Intermediate finished at $62.84 per barrel, down $1.79.

The IEA continued the narrative it spun throughout 2025 by warning in its latest monthly report that global oil demand will rise far slower this year than previously expected, compared to a sizeable surplus exacerbated by significant anticipated supply from Venezuela.

As for the U.S. and Iran, Israeli prime minister Benjamin Netanyahu told media that U.S. president Donald Trump appeared to be framing a resolution to the conflict with Iran over nuclear weapons.

Andrew Lipow, president of Lipow Oil Associates, remarked, "The fact that president Trump continues to negotiate with Iran would lead to a reduction of geopolitical risk," although the next round of talks between the two countries have yet to be announced.

Vandana Hari, founder of Vanda Insights, added, "Additional adversarial rhetoric or military posturing may add incremental risk premium, but gains are likely to be capped unless U.S. strikes on Iran appear imminent."

Contributing to a possible sustained downward trajectory in oil prices in the days to come was U.S. inventories: specifically, the Energy Information Administration disclosed that crude rose by 8.5 million barrels to 428.8 million barrels last week, compared with expectations for a 793,000 barrel increase.

Julian Pineda, marker analyst at Forex.com, pointed out that "With just one session left before the trading week ends, WTI crude has begun to show consistent short-term weakness, posting a decline of nearly 4 percent in the current session".

Pineda went on to note that "As long as demand fails to show clear signs of recovery, this environment could continue fueling more meaningful selling pressure in WTI over the coming weeks."

In other oil news on Thursday, hostilities between Ukraine and Russia continued despite massive multi-country efforts to bring about a resolution: a Ukrainian drone attack caused fires at Russia's Volgograd oil refinery and subsequent suspension of operations.

In 2025, nearly 40 percent of Russia's oil refining capacity was forced offline at different times, with about 70 percent of these shutdowns linked to Ukrainian drone strikes.