Oil Declines as Markets Assess Trump's Threats to Iran

SadaNews - Oil declined alongside broader markets as traders assessed President Donald Trump's latest threat to resume strikes on Iran.

Brent crude prices fell below $110 a barrel after a 0.7% drop on Tuesday, while West Texas Intermediate crude approached $104, as Asian stocks declined for the fourth day.

Trump stated that if Iran does not agree to U.S. terms, "we may have to deliver another major strike against them," less than a day after saying he delayed an attack.

Trump's remarks once again raised the possibility of hostilities resuming with Iran, which has yet to comply with U.S. demands to abandon elements of its nuclear program following weeks of strikes that began in late February.

However, the president has repeatedly threatened and then retreated on renewing military action since the ceasefire agreement on April 8, leaving traders hesitant to increase buying positions without stronger evidence of fighting resuming.

Trump's Threats Not Enough to Push Oil Upward

When asked how long he would wait, Trump replied, "Well, I would say two or three days, maybe Friday, Saturday, Sunday. Maybe early next week, a limited timeframe."

The conflict, which is now entering its twelfth week, has crippled traffic through the Strait of Hormuz, pushing global energy prices and inflation higher.

The United States also seized an Iran-linked tanker in the Indian Ocean overnight, marking at least the third such seizure targeting Tehran's shadow fleet, according to the Wall Street Journal.

With no solution in sight, prices fell further after news that NATO was discussing the possibility of assisting ships to transit through the Strait of Hormuz if the vital energy shipping route is not reopened by early July.

According to a Goldman Sachs survey earlier this month, investors increasingly priced in a closure extending beyond July, meaning a NATO-led effort to guide ships through the critical passage could bring supplies back to the market sooner than expected.

Massive Bet on Brent Decline Disturbs Markets

Meanwhile, White House officials are maintaining their stance against constraining oil exports, even as domestic inventories dwindle.

A sector report indicated that U.S. crude inventories fell by 9.1 million barrels last week, which would be the largest decline since September, if confirmed by official data due later on Wednesday.

On Tuesday, a massive bet was traded on put options for Brent crude, equivalent to 134 million barrels, in a single transaction. This confused a market that was already on high alert regarding unusual flows.