Brent traded near $96 a barrel, following a drop of more than 5% on Wednesday. American forces shot down four Iranian drones fired at a commercial ship and hit a launch unit near Hormuz, according to a US official. In response, Iran targeted the US base from which the strikes came, state-run Press TV reported.

Separately, Kuwaiti Air Defenses said they were responding to missile and drone threats, highlighting the fragility of the current ceasefire, with the conflict that’s gripped global financial markets now entering its fourth month.

Still, prices remain below where they began the week, after a series of steep drops driven by market expectations that the US and Iran would agree to a deal to end the conflict.

Sticking points in the negotiations remain, however, including the Islamic Republic’s nuclear program and Iran wanting to retain control over Hormuz, which remains subject to a double blockade by Tehran and Washington. The conflict has choked off energy flows, with millions of barrels of daily oil supply shut-in across the region.

“If the ceasefire is broken, the oil market faces resurging risks,” said June Goh, senior oil market analyst at Sparta Commodities SA, citing the possibility of further attacks against oil infrastructure after inventories had fallen.

The US Treasury sanctioned the Persian Gulf Strait Authority to prevent Tehran from profiting from vessels transiting the waterway by charging tolls, according to a statement. The entity “spearheads an Iranian-controlled scheme that flagrantly violates international law,” the Treasury said. Five Middle Eastern countries previously rejected the establishment of the PGSA and told shipowners not to engage with it.

In the US, an industry group flagged another drawdown in oil stockpiles. The American Petroleum Institute reported that nationwide crude holdings fell 2.8 million barrels last week, including a decline at the hub in Cushing, Oklahoma. Official data are due later Thursday. American stockpiles have tumbled in recent weeks, becoming the clearest signal of oil market tightness as a result of the war.