Oil Prices Drop 3% After Trump Says Iran Killing Has Stopped

TLDR

• Oil prices dropped 3% on Thursday after President Trump said the “killing has stopped” in Iran, easing fears of military intervention
• Brent crude fell to $64.63 per barrel while WTI declined to $60.23 per barrel following Trump’s comments
• Prices had surged earlier in the week when Trump threatened action and ordered personnel evacuated from a Qatar military base
• U.S. crude inventories increased by 3.4 million barrels last week, higher than expected
• Venezuelan oil returned to markets with the first U.S. sale completed Wednesday

Oil prices fell sharply on Thursday following remarks from President Donald Trump about the situation in Iran. The drop came after Trump told reporters that “killing has stopped” in the country.

Brent crude oil futures dropped 2.8% to settle at $64.63 per barrel. West Texas Intermediate crude lost 2.9% to trade at $60.23 per barrel.

The price decline reversed gains from earlier in the week. On Tuesday and Wednesday, oil prices had jumped on fears of potential U.S. military action.

Trump had canceled meetings with Iranian officials earlier this week. He also promised protesters that “help is on its way.”

Reports of military movements added to the tension. Reuters reported that some U.S. personnel were directed to leave Al Udeid Air Base in Qatar by Wednesday evening.

The U.S. government issued an advisory to American citizens in Iran on Tuesday. The advisory told citizens to leave the country immediately by land through Armenia or Turkey.

Market Response to Geopolitical Tensions

The Virtual Embassy warned Americans not to rely on government help for departure. It advised citizens who couldn’t leave to find secure locations with supplies of food, water, and medications.

Deutsche Bank analyst Jim Reid said markets interpreted Trump’s comments as a signal that military response might be postponed. However, he noted lingering caution remains among traders.

Iran produces about 4% of the world’s oil supply based on 2023 figures. This makes developments in the country important for global oil markets.

Oil company stocks declined following the price drop. Chevron fell 0.5% and Exxon declined 0.9% in pre-market trading.

Shell was down 1.3% in early European trading. BP dropped 2.3% during the same period.

Supply Factors Affecting Prices

U.S. crude inventories data showed an increase last week. Stockpiles rose by 3.4 million barrels to reach 422.4 million barrels.

The inventory increase was larger than analysts had expected. This additional supply puts downward pressure on prices.

Venezuelan oil is returning to global markets. The U.S. completed its first sale of Venezuelan oil on Wednesday.

The return of Venezuelan supply is expected to push near-term prices lower. However, analysts warn traders to prepare for continued volatility.

Trump had previously threatened to impose a 25% tariff on countries doing business with Iran. This came after deadly anti-government protests in the country.

The geopolitical risk premium that had supported oil prices has now tapered off. Markets are refocusing attention on supply and demand fundamentals.

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