Trump Brakes Off Iran Strike, Oil Takes a U-Turn
Oil prices plummeted sharply on Thursday, recording their deepest drop since October, after US President Donald Trump signaled that a swift strike on Iran might be on hold. This statement immediately deflated the risk premium that had boosted prices over the past week.
In recent trading, Brent was trading around US$63.7/barrel (down >4%), while WTI was in the US$59.8–60.5/barrel range.
The market assessed the likelihood of supply disruptions from Iran and strategic shipping lanes in the Gulf as diminishing after Trump said he had received information that violence related to the crackdown on protests in Iran was easing, thus reducing the urgency of a US military response.
In fact, the day before, tensions had appeared to be heading towards a more heated scenario: Iran briefly closed its airspace, while reports emerged of adjustments to US personnel deployments in the region. This series of headlines had positioned the market for escalation, before being reversed by Trump's comments.
In addition to geopolitical factors, pressure also comes from fundamentals. The US inventory report showed a larger-than-expected rise in oil stocks, adding to the market's desire to lock in profits after a sharp rally.
The volatility of the past few days has also been amplified by flows in the derivatives market: speculative positions and options activity have contributed to widening price swings—both during upswings and downturns.
Nevertheless, market participants believe the oil story is not yet over. In addition to Iran and Venezuela, supply risks have also emerged from the Black Sea region, maintaining high price sensitivity to headlines.
Source: Newsmaker.id
