Oil prices eased on Thursday after surging more than 4% the previous day, as traders reassessed geopolitical risks in the Middle East alongside renewed concerns over U.S. trade policy. Brent crude slipped to around $69 a barrel, while U.S. West Texas Intermediate hovered near $67.4.
The rally earlier in the week was driven by fears of escalating conflict between the U.S. and Iran. Washington ordered the evacuation of non-essential embassy staff in Iraq, Bahrain, and Kuwait, citing security risks. At the same time, Iran warned it would strike American bases if nuclear talks fail.
President Trump reaffirmed the U.S. stance against allowing Iran to develop nuclear weapons and hinted at military action if diplomacy breaks down. Talks between U.S. and Iranian officials are set for Sunday in Oman, where Tehran is expected to present a new proposal. Iran maintains its nuclear activities are peaceful, while the U.S. seeks stricter curbs.
The growing tensions raised fears of supply disruptions in the region, which produces about a third of the world's oil. However, analysts say the recent price spike may have been excessive, as no direct threat has yet materialized. Market volatility has increased, with options pricing reflecting uncertainty.
Adding pressure to oil prices was a shift in broader market sentiment due to Trump’s announcement of potential unilateral tariffs, reviving trade war fears. This risk-off mood dampened demand for commodities.
Meanwhile, U.S. crude inventories fell by 3.6 million barrels last week, a larger draw than expected, providing modest support to the market.
While geopolitical risks continue to lend a premium to prices, particularly for Brent, traders remain cautious, awaiting clearer signals from the upcoming U.S.-Iran meeting.