Oil prices fell sharply on Thursday, with both major benchmarks dropping over 3%, after U.S. President Donald Trump stated that the "killing has stopped" in Iran, significantly reducing fears of imminent U.S. military intervention. Brent crude futures settled at $64.63 per barrel, a 2.8% decline, while West Texas Intermediate (WTI) crude lost 2.9% to trade at $60.23 per barrel. The drop reversed gains from earlier in the week when prices surged on Trump's threats of action and the evacuation of some U.S. personnel from Al Udeid Air Base in Qatar.
Trump cited "very important sources" in Iran for the information and stated there were no plans for executions, which markets interpreted as a signal that a military response might be postponed. This alleviated the geopolitical risk premium that had been supporting oil prices. Iran produces approximately 4% of the world's oil supply, making stability in the region crucial for global markets.
Additional supply-side factors contributed to the price pressure. U.S. crude inventories unexpectedly increased by 3.391 million barrels last week, contrary to analyst forecasts of a draw. Furthermore, Venezuelan oil is returning to global markets, with the first U.S. sale completed on Wednesday and two supertankers carrying an estimated 1.8 million barrels each departing Venezuelan waters, signaling the start of a reversal of previous production cuts.
Analysts noted that while tensions have eased, the situation remains volatile. James Hyerczyk, a technical analyst, warned, "Looking ahead, despite Trump’s comments, the Iran situation hasn’t been taken off the table," suggesting the market must be prepared for potential supply disruptions. The market's focus has now shifted back to fundamental supply and demand dynamics.
