Oil prices fell despite a fresh escalation in hostilities between the US and Iran, TPH Energy Research analyst Jeff LeBlanc said in a Thursday note.
The two sides exchanged multiple rounds of strikes that further undermined ceasefire efforts and cast doubt on prospects for a negotiated peace agreement
The latest cycle of hostilities began after Iranian forces downed a US Apache helicopter, prompting retaliatory action.
A second round of strikes followed after US President Donald Trump publicly expressed frustration over Iran's failure to sign a proposed peace deal.
Oil markets showed a relatively muted reaction. Brent crude remained below recent highs, trading roughly 1% lower than last Friday's level and about 6% below peaks reached earlier this week. However, the security situation appeared to worsen as both sides adopted increasingly confrontational rhetoric.
Trump warned that additional US strikes could follow if an agreement is not reached. Iran's Foreign Ministry responded by saying recent military actions had effectively rendered the ceasefire meaningless, while emphasizing that Iran was working to "neutralize the origin and source of aggressive attacks against Iran."
Despite the intensifying conflict, neither Washington nor Tehran has indicated a willingness to abandon diplomacy altogether. Nevertheless, both governments appear to be placing greater emphasis on military measures as negotiations remain stalled.
International actors continued to call for restraint. China and several other countries urged both sides to return to the negotiating table and avoid further escalation. However, prospects for a near-term agreement appeared increasingly uncertain under current conditions.
Meanwhile, disruptions to regional trade routes intensified. Iran fully closed the Strait of Hormuz, a critical artery for global energy shipments.
The Iran-aligned Houthis have warned of the potential economic consequences of further military action but have not moved to close the Bab al-Mandeb Strait, another key maritime chokepoint.