(RTTNews) – After surging over the two previous sessions, crude oil prices have tumbled on Thursday after U.S. President Donald Trump remarked that Iran is seeking a deal with the U.S., raising expectations of an end to the ongoing standoff. In addition, investors resorted to booking profits from the recent spike.
WTI Crude Oil for August month delivery was last seen trading down by $1.52 (or 2.07%) at $72.00 per barrel.
Putting the Memorandum of Understanding signed on June 17 for a 60-day ceasefire at risk, the U.S. and Iran have exchanged attacks for the past two days.
Iran reopened the Strait of Hormuz following the MoU and the U.S. allowed Iran to export its oil until August 21. In addition, the U.S. lifted the naval blockade enforced on Iranian ports.
Oil prices moved lower after the deal as the associated risk premium started to diminish and oil-linked inflationary pressure on major global economies began to subside.
However, after separate incidents involving projectile strikes on three ships transiting through the Strait of Hormuz on Monday, a new military conflict erupted between the U.S. and Iranian forces.
The U.S. Treasury Department’s Office of Foreign Assets Control also revoked the license to Iran for oil exports.
On Wednesday, U.S. Central Command conducted strikes on nearly 80 strategic military installations on Iran while Iran’s Islamic Revolutionary Guards Corps claimed attacking the U.S. bases in Kuwait and Bahrain.
In a second wave of attacks, U.S. forces struck around 90 sites in Iran to degrade Iran’s capabilities to attack vessels traveling across the strait.
Trump initially stated that he felt the peace talks were over but also admitted that he had allowed negotiations to continue.
Today, while speaking to reporters aboard Air Force One, Trump stated that Iran reached out to the U.S. to strike a deal. Claiming that Iran wants to make a deal badly, Trump remarked that he was unsure if Iran would honor any agreement.
The fresh confrontation offered a risk premium to crude oil prices for the past two days.
Investors are anticipating a pause to the attacks as they infer from Trump’s remarks that he intends to pursue the diplomatic route to end the crisis but use military threats to pressure Iran.
Yesterday, the minutes of the U.S. Federal Reserve’s June meeting were released, revealing that a majority of Fed’s policymakers believed that additional interest hikes could be warranted if inflation stays elevated due to the impact of Artificial Intelligence, the Middle East conflict, or the consequences of U.S. tariffs.
On the economic front, data released by the U.S. Labor Department revealed that the initial claims for unemployment benefits came in at a seasonally adjusted 215,000 for the week ending July 4, below expectations of 218,000, reinforcing the indications of a resilient labor market with relatively low layoffs.
Continuing jobless claims totaled 1,814,000 for the week ending June 27, lower than forecasts of 1,820,000.
Experts are of the view that tighter monetary policy could slowdown the economic activity and weaken fuel demand, and this weighed on oil prices.
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