Oil held steady as traders weighed renewed tariff threats from the US against the potential for widespread conflict in the Middle East.
West Texas Intermediate traded in a roughly $2.50 range before closing the session with a small drop to near $68 a barrel. The commodity temporarily inched into positive territory on an ABC report that Israel is considering taking military action against Iran in the coming days. Traders have been on edge since Iran threatened to strike American bases if nuclear talks fell through.
Weighing on prices were earlier comments from President Donald Trump that he intended to set unilateral tariff rates on trading partners in the next one to two weeks, which blunted appetite for risk assets.
Iran’s threats on Wednesday jolted crude out of the narrow range it had traded in for most of the past month, highlighting oil’s sensitivity to geopolitical tensions. The Middle East produces about a third of the world’s oil, driven by OPEC+ members Iran, Saudi Arabia and Iraq. Prices are up about 12% this month, and JPMorgan Chase & Co. on Thursday said oil could reach $130 in a worst-case scenario.
The move has also been coupled with big shifts in options pricing as traders assess the risk of escalation. Bullish call options on the global Brent benchmark are trading at premiums to bearish puts, and volatility spiked.
Oil still is down for the year on expectations the US-led trade war would erode demand as OPEC+ revives idled production.
On Iran, Trump has consistently said he wants an agreement that curbs the nation’s atomic activities and that the US could strike Iran if talks break down, before saying that he would “love to avoid conflict” with the country. Tehran says it is preparing a fresh proposal regarding the program before a sixth round of negotiations in Oman’s capital of Muscat on Sunday.
The leader of Iran’s Revolutionary Guard Corps told state TV that it was ready for any scenario and had military strategy at its disposal.
“The announced drawdown of all non-essential US Embassy staff from Baghdad and authorized departure of non-essential personnel from Bahrain and Kuwait raises the specter of a heightened threat environment in the region,” RBC Capital Markets LLC analysts including Helima Croft said in a note.
Prices
WTI for July delivery fell 11 cents to settle at $68.04 a barrel in New York.
Brent for August settlement slipped 41 cents to $69.36 a barrel.
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