Oil prices drop by 3% after Trump minimizes chances of conflict with Iran

Oil Prices Tumble as Geopolitical Tensions Ease

Oil markets experienced a sharp decline in early Asian trading on Thursday, with both WTI and Brent crude benchmarks dropping by roughly 3 percent. This downturn followed remarks from U.S. President Donald Trump, which appeared to reduce the chances of an immediate American military response against Iran.

At the latest update, WTI crude had fallen by $1.86, or 3.00 percent, to $60.16 per barrel. Meanwhile, Brent crude was trading at $64.57, down $1.95, or 2.93 percent for the day. This marks a notable reversal from earlier in the week, when escalating geopolitical risks had driven prices higher.

Market Sentiment Shifts After Trump’s Comments

President Trump stated that he had received information indicating a decrease in violence against protesters in Iran and that there were no intentions for mass executions. These comments suggested a reduced likelihood of direct U.S. military involvement, leading to a drop in the geopolitical risk premium that had been supporting oil prices.

In a later interview with Reuters, Trump also questioned whether Reza Pahlavi, the son of Iran’s former shah, could rally significant support within the country.

Focus Returns to Market Fundamentals

With geopolitical concerns easing, traders shifted their attention to bearish market fundamentals. U.S. crude stockpiles rose more than analysts had anticipated last week. Additionally, there are growing expectations that Venezuelan oil will soon re-enter the market, as the U.S. completed its first sale of Venezuelan crude on Wednesday.

Although President Trump’s statements have somewhat calmed the markets, ongoing protests in Iran continue, leaving the outlook uncertain.

By Charles Kennedy, Oilprice.com

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