Global oil prices declined on Thursday as hopes for reduced tensions in the Middle East improved market sentiment following reports of a ceasefire agreement between Israel and Lebanon and renewed expectations of negotiations with Iran.

Brent crude fell by 67 cents to trade at $97.14 per barrel, while US West Texas Intermediate (WTI) crude dropped 62 cents to $95.40 per barrel. The decline came a day after both benchmarks recorded gains of nearly 2 percent.

Oil prices had surged on Wednesday amid growing concerns over regional instability, including reports of Iranian attacks on Kuwait and US military operations near the strategically important Strait of Hormuz. Investors feared that escalating conflict could disrupt global energy supplies and push prices higher.

Market sentiment improved after news emerged that Israel and Lebanon had agreed to a ceasefire framework, raising hopes that tensions in the region could ease in the coming weeks.

Meanwhile, political developments in Washington also attracted attention. The US House of Representatives approved a resolution aimed at limiting President Donald Trump's authority to launch military action against Iran. However, the measure still requires Senate approval and may face a presidential veto.

President Trump has indicated that progress in negotiations with Iran could emerge before the end of the week. Iranian Foreign Minister Abbas Araghchi also confirmed that communication channels between Tehran and Washington remain open, although no major breakthrough has yet been achieved.

Adding support to the market, the US Department of Energy reported that crude oil inventories fell by 8 million barrels to 433.7 million barrels during the week ending May 29, a much larger decline than analysts had expected.