Oil prices dipped on Thursday, reversing earlier gains made during the Asian trading session. This shift came as market participants assessed the implications of a U.S. decision to withdraw personnel from the Middle East ahead of forthcoming discussions with Iran regarding its nuclear activities. Brent crude futures fell by 73 cents, or 1.1%, to $69.04 per barrel, while U.S. West Texas Intermediate crude decreased by 66 cents, or 1%, to $67.49 per barrel.
The previous day had seen both Brent and WTI rise over 4% to reach their highest levels since early April. U.S. President Donald Trump commented on the situation, stating that the U.S. was relocating personnel due to concerns about the Middle East being potentially dangerous. He emphasized that the U.S. would not permit Iran to develop nuclear weapons, a claim Iran disputes, asserting that its nuclear activities are peaceful.
The heightened tensions with Iran have raised concerns that oil supplies could be disrupted, particularly with a meeting scheduled between the two sides on Sunday. Analyst Arne Rasmussen expressed that the main worry for the oil market is the possibility of Iran blocking the Strait of Hormuz, a critical chokepoint that could impact around 20% of global oil flows. Britain’s maritime agency raised alarms about potential military escalation in the region that might affect shipping through key waterways like the Gulf, the Gulf of Oman, and the Straits of Hormuz.
In response to rising security concerns, the U.S. is planning a partial evacuation of its Iraqi embassy and allowing military dependents to leave various locations in the Middle East. Concurrently, some analysts, including OANDA’s senior market analyst Kelvin Wong, noted that oil prices weakened after hitting key technical resistance levels and that there was speculation regarding a potential de-escalation resulting from the U.S.-Iran meeting. However, tensions remain high, with threats exchanged by both nations, including Iran’s promise to strike U.S. bases if discussions fail.