Oil Drops As Trump Signals Iran Strike Decision Within Two Weeks
Oil slumped after President Donald Trump signaled a decision on whether to strike Iran will be made within two weeks, easing fears about an imminent attack from the US.
Brent tumbled as much as 2.7% to trade below $77 a barrel, before clawing back some losses. White House spokeswoman Karoline Leavitt said that the decision would take some time due to the “substantial chance of negotiations” with Iran, according to a dictated message from Trump. She declined to elaborate on the timeline, including on how he views the chances of success of any talks.
It's been a turbulent week for the oil market, with futures swinging in a range of around $8, volatility spiking, timespreads significantly widening, and options at one stage more bullish than after Russia's invasion of Ukraine.
Brent closed almost 3% higher on Thursday on concerns over a potential strike from the US over the weekend. Senior American officials had been preparing for the possibility of an attack, although the situation was still evolving, according to people familiar with the matter.
“Leavitt's comments has taken some of the urgency out the market,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “At least for the moment, we are set to remain very well supported in this super volatile $70-$80 range.”
Israel has continued to attack Iran's nuclear sites, but for now the country's crude-exporting infrastructure remains unscathed. There are signs, however, that the OPEC producer is racing to get its oil out into the world, as storage tanks at the critical Kharg Island terminal brim with crude.
The biggest concern for the oil market centers on the Strait of Hormuz, but so far there are no signs that Tehran is seeking to disrupt shipping through the narrow waterway at the entrance to the Persian Gulf. About a fifth of the world's crude output passes through the strait.
Trump is set to attend a National Security meeting on Friday morning, according to a daily schedule issued by the White House. Iran should never get a nuclear weapon, US Secretary of State Marco Rubio said in a post on X following a meeting with UK Foreign Secretary David Lammy to discuss the conflict.
Prices:
Brent for August settlement declined 2.1% to $77.21 a barrel as of 1:01 p.m. in Singapore.
Futures are still on track for a third weekly gain.
WTI for August delivery rose to $73.96 a barrel from Wednesday's close, after there was no settlement Thursday due to the US holiday.
The front-month July contract, which expires Friday, climbed to $75.67.
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