Oil Prices Tumble as Iran Tensions Cool and US Inventories Rise
Oil prices dropped sharply today as concerns about potential US military action against Iran subsided. North Sea Brent crude fell by 4.2 percent shortly after 14:00 CET, slipping below $64 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude declined by nearly 4.4 percent, nearing $59 per barrel.
The recent surge in oil prices was driven by fears that US intervention in Iran could disrupt the country's oil supplies. Iran has faced widespread protests since late December, which authorities have violently suppressed. US President Donald Trump had warned Tehran of severe consequences if protesters were killed or detainees executed. However, on Wednesday evening, Trump stated that the killings had stopped and no further executions were planned.
Despite the easing tensions, analysts caution that the risk of supply disruptions remains. Ole Hansen, an analyst at Saxo Bank, noted that while the immediate risk premium in oil prices has fallen, the underlying risk has not disappeared. This sentiment reflects ongoing uncertainties in the region.
Additionally, oil prices were pressured by a surprise increase in US crude inventories. The US Energy Information Administration reported that inventories rose by 3.4 million barrels to 422.4 million barrels last week, defying expectations of a 1.7 million barrel decline. Gasoline inventories also rose by 9 million barrels, exceeding forecasts of a 3.6 million barrel increase.