(RTTNews) – The geopolitical risk premium posed by a potential US-Iran conflict eased after US President Donald Trump suddenly softened his stance yesterday, and as a result, crude oil prices fell on Thursday.
WTI crude oil for February delivery was last seen trading at $59.19 per barrel, down $2.83 (or 4.56%).
In Iran, a civil uprising began in December against the government’s inability to control prices or stop the decline of the Iranian rial.
As the uprising spread to other cities, authorities cracked down on protesters, leading to violent clashes that left hundreds dead. Many protesters remain behind bars, some have been hanged and many face the death penalty.
The true picture was “blacked-out” due to Internet cut-offs. Supported by Starlink, the protesters highlighted how the junta executed protesters.
An angry President Trump warned Iran that the US would intervene to control the situation. However, Iran shrugged off Trump’s threat and warned its neighbors not to shelter US forces and threatened to attack them if the US carried out airstrikes on Iran.
Iran is one of the largest producers in the OPEC alliance. In addition, it controls the Strait of Hormuz, a strategic chokepoint for oil flows which, if attacked, could sever the main artery of oil transportation.
The increase raised concerns over oil production and supply, and the growing threat of war sent oil prices higher.
Yesterday, Trump said he had been informed by “very important sources” that “the killing has stopped” in Iran and that he would like to see how the situation stands for now.
Trump’s return caused oil prices to decline as the geopolitical risk premium decreased.
The Russia-Ukraine war has entered a critical phase, with Trump accusing Ukrainian President Volodymyr Zelensky of blocking a potential peace deal with Russia. Ukraine has refused to cede any territory to Russia, bolstered by assurances from allies in the European Union.
Russia has intensified its attacks on the battlefield to increase pressure on Ukraine.
An agreement could end the war and allow Russian oil to flow onto the market, while a standoff could push the war into a more dangerous situation.
In the Caribbean, the US has captured another oil tanker (named Veronica) reportedly belonging to Venezuela. It is the sixth tanker intercepted by the US since December when the US began targeting Venezuelan-linked vessels carrying “sanctioned oil”.
Since the capture of Venezuelan President Nicolas Maduro by US forces earlier this month, Trump has been focused on using Venezuela’s rich oil reserves. Under Trump’s inspiration, oil majors are considering investing billions of dollars in Venezuela to revive the oil business.
The interim regime has agreed to provide crude oil worth $5 billion to America.
Today in the US, in an interview with CNBC, Chicago Federal Reserve President Austin Goolsbee said there is strength in the job market and the central bank should focus on getting inflation into the 2% range. Goolsby said that when inflation returns to the target range, rates could go down.
Recent payroll data showed a decline in the unemployment rate in December. This “low rent, low fire” scenario has dampened expectations for a rate cut.
Separately, earlier this week, the US Justice Department launched a criminal investigation into Fed Chairman Jerome Powell related to alleged financial misconduct in the renovation of the Fed building.
Yesterday, the US Supreme Court postponed its decision on the legality of Trump’s tariff-imposing powers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Reflect the views of.
