Oil fell the most since June after the US held off on attacking Iran for now as the country pledged not to execute protesters.
West Texas Intermediate slumped 4.6% to settle near $59 a barrel on Thursday after a 10% jump over the past week. The New York Times reported that Israel’s Prime Minister Benjamin Netanyahu asked US President Donald Trump to postpone plans for a military attack on Iran. The news reduced the likelihood of an immediate US response to a crackdown on a domestic uprising against the regime and of disruptions to Iranian production or key shipping lanes.
That comes after Trump told reporters Wednesday that he had been informed the “killing in Iran is stopping,” adding he would be “very upset” if the country continued to execute protesters. White House Press Secretary Karoline Leavitt reiterated on Thursday that there would be “grave consequences” if the violence continued, keeping investors on their toes.
The US Treasury Department, meantime, announced sanctions on Iran’s Secretary of the Supreme National Security Council and 18 individuals and entities part of what it says is a shadow bank network, reinforcing expectations conflict is not immediate.
“Developments in Iran, so very much part of the driving force behind the recent rally, have taken a much less anxious turn overnight,” said John Evans, an analyst at brokerage PVM. “The ladder of risk premium has been lost.”
Oil has pushed higher in the new year as turmoil in OPEC’s fourth-largest producer, along with upheaval in Venezuela, added geopolitical risk to prices. There’s also been material disruption to Kazakh exports in the Black Sea due to a combination of drone attacks, maintenance and bad weather, which has also bolstered prices.
Crude’s major swings in recent days have also been driven by financial flows. Bullish options volumes are already heading for their second biggest week on record, and positioning in those markets has exacerbated price swings in both directions.
Separately, Trump told Reuters that he believes it would be better for Venezuela to remain in OPEC, but was unsure how that would be for the US, adding that Washington hadn’t discussed this with Caracas. More industry executives said they require guarantees that their assets won’t someday be seized by Venezuela before committing to revive the nation’s crude production.
US forces also seized another oil tanker near Venezuela on Thursday morning as part of a quarantine on the sale of sanctioned oil.
Major shipping group A.P. Moller-Maersk A/S will return to sailing regularly through the Suez Canal this month. The voyage represents an easing of geopolitical risk, after Yemen-based Houthis in 2023 began attacking vessels, forcing shipowners to sail south of Africa.
Oil Prices
WTI for February delivery fell 4.6% to settle at $59.19 a barrel in New York.
Brent for March settlement dropped 4.2% to settle at $63.76 a barrel.
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