Oil Prices Decline as Trump Hints at Postponing Attack on Iran

SadaNews - Oil prices fell for the first time in six days after U.S. President Donald Trump indicated that he might postpone an attack on Iran for now.

Brent crude dropped by as much as 2.9% to trade below $65 per barrel after rising about 11% over the past week, while West Texas Intermediate crude traded close to $60 per barrel.

Trump stated that he received assurances that Iran would stop killing protesters, which reduced the likelihood of an immediate U.S. military response to the protests against Supreme Leader Ali Khamenei's government, as well as the chances of disruption to Iranian production and key shipping lanes.

However, the situation in Iran remained volatile. Authorities temporarily closed the airspace around Tehran, while the United States redeployed some of its personnel in Qatar and around other U.S. military bases in the region.

Geopolitical Factors Support Prices at the Start of the Year

Oil prices increased at the beginning of the new year, with renewed instability in the world’s fourth-largest producer in OPEC, alongside turmoil in Venezuela, adding a premium to markets after five consecutive monthly losses fueled by expectations of surplus supply.

Trump mentioned that he had a "very good call" with interim Venezuelan President Delcy Rodríguez on Wednesday, discussing topics including oil. He also told Reuters that he supports Caracas remaining within OPEC.

Robert Rennie, head of commodity research at Westpac Banking Corp, stated: "The geopolitical strength driving Brent crude is likely to continue, and certainly, testing the $75 level remains a possibility."

He added that this increase could be followed by a collapse upon "declaration of danger's removal" or in the event of the Khamenei regime's collapse, similar to market movements during the Israeli war on Iran in June.

Rising Inventories Pressuring West Texas

Elsewhere, U.S. government data showed that crude inventories at the national level rose by 3.4 million barrels last week, the largest increase since early November.

The rise in inventories, along with growing shipments of Venezuelan oil heading to the U.S., in addition to a disruption at a key Black Sea facility, pushed West Texas Intermediate crude close to its deepest discount to Brent crude in 15 months.