By: Economy Middle East

Oil prices declined on Thursday after a ceasefire agreement between Israel and Lebanon raised expectations of a wider diplomatic breakthrough that could help end the U.S.-Israeli conflict with Iran.

Market sentiment was also influenced by the U.S. House of Representatives‘ approval of a resolution aimed at limiting President Donald Trump’s authority to engage in military action.

By 4:06 GMT, Brent crude futures fell 91 cents, or 0.93 percent, to $96.90 a barrel, while U.S. West Texas Intermediate crude lost 82 cents, or 0.85 percent, to $95.2 a barrel.

Traders await U.S.-Iran negotiations progress

Oil prices had gained around 2 percent on Wednesday, building on the previous session’s rally as escalating tensions in the Middle East, including Iranian attacks on Kuwait and U.S. military strikes near the Strait of Hormuz, heightened concerns over potential supply disruptions.

Meanwhile, the U.S. House of Representatives passed a resolution seeking to prevent Trump from continuing military action against Iran. However, the measure would still require Senate approval and a two-thirds majority in both chambers to overcome a likely presidential veto.

Trump also indicated on Wednesday that negotiations with Iran could show signs of progress as early as this weekend.

For his part, Iranian Foreign Minister Abbas Araqchi said communication channels between Tehran and Washington remain open, though no breakthroughs have been achieved. He added that both sides are currently reviewing draft texts that have been exchanged as part of the negotiations.

U.S. crude inventories decline by 8 million barrels

Limiting losses in oil prices, U.S. crude inventories declined by 8 million barrels to 433.7 million barrels in the week ending May 29, according to data released by the U.S. Energy Information Administration on Wednesday. The draw was significantly larger than analysts’ expectations.

U.S. crude exports surged to 5.9 million barrels per day, among the highest levels ever recorded, as refiners and traders in Europe and Asia turned to American supplies to offset disruptions stemming from the conflict in the Middle East.

Ongoing concerns over global supply availability have also provided support to oil prices. According to the Energy Information Administration, worldwide oil inventories are being depleted at a rapid pace and could fall to critically low levels ahead of the peak summer demand season if current trends persist.