Oil Slips After Israel-Lebanon Ceasefire Boosts Diplomacy Hopes

Oil prices fell Thursday, June 4, 2026, after Israel and Lebanon agreed to implement a ceasefire that markets viewed as a potential opening for a broader deal to end the U.S.-Israeli war with Iran. Brent crude futures fell 67 cents, or 0.69%, to $97.14 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped 62 cents, or 0.65%, to $95.4.

The move reversed the prior session’s gains, when both benchmarks rose about 2% after renewed hostilities in the Middle East. Those developments included Iranian attacks on Kuwait and U.S. military strikes near the Strait of Hormuz.

Traders also weighed U.S. political developments around the conflict. The U.S. House of Representatives approved a resolution on Wednesday aimed at limiting President Donald Trump’s war powers regarding Iran, though it would still require Senate approval and a two-thirds majority to override a potential presidential veto.

Middle East developments pull focus back to diplomacy

The ceasefire between Israel and Lebanon helped ease near-term supply fears that had lifted prices earlier in the week. The agreement raised expectations in markets that talks could eventually widen into a broader framework addressing the U.S.-Israeli conflict with Iran.

President Trump suggested on Wednesday that negotiations with Iran could see progress as soon as this weekend. Iran’s Foreign Minister Abbas Araqchi said contacts with Washington had not been cut off, but that no progress had been made, and that both sides were studying exchanged texts.

U.S. stockpile draw adds support under prices

In the United States, crude inventories fell by 8 million barrels to 433.7 million barrels in the week ended May 29, officials said. That exceeded analysts’ expectations for a 4-million-barrel draw.

Haitong Futures said oil prices are likely to move toward the upper end of their range due to a persistent supply-demand imbalance as global crude inventories fall rapidly.

Markets will watch for any further developments in ceasefire implementation and Iran talks, as well as the next round of inventory data for signals on supply and demand.