Oil prices eased on Thursday, pulling back from earlier gains in Asian trading as investors evaluated the implications of a U.S. personnel relocation from the Middle East ahead of nuclear talks with Iran.
By 0630 GMT, Brent crude futures had slipped 49 cents (0.7%) to $69.28 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 41 cents (0.6%) to $67.74. This followed a sharp rally the previous day, when both benchmarks jumped over 4% to their highest levels since early April.
President Donald Trump said the U.S. was moving personnel out of the region due to the potential for danger, reiterating that the U.S. would not permit Iran to acquire a nuclear weapon. Iran maintains its nuclear activities are for peaceful purposes.
Heightened tensions between Washington and Tehran have raised concerns over possible disruptions in oil supply. Talks between the two sides are scheduled for Sunday.
Vivek Dhar, head of mining and energy commodities research at Commonwealth Bank of Australia, said that while Brent breaching $70 may have been an overreaction, there was no concrete threat of an Iranian attack cited by the U.S. He added that Iran’s response will likely depend on further U.S. escalation.
“A price retreat is logical,” Dhar noted, “but geopolitical uncertainty will likely keep Brent supported above $65 until more clarity emerges from the upcoming negotiations.”
According to Reuters, the U.S. is preparing to partially evacuate its embassy in Iraq and allow military dependents to leave parts of the Middle East due to increased security concerns. Iraq, a key member of OPEC, is the cartel’s second-largest crude producer after Saudi Arabia. The U.S. is also permitting dependents to leave Bahrain, a key regional base.
Oil prices also declined after touching key technical resistance levels during Wednesday’s rally. Some traders are now speculating that Sunday’s U.S.-Iran talks could lead to a de-escalation in tensions, said OANDA analyst Kelvin Wong.
Trump has warned repeatedly that military action remains an option if a deal with Iran over its nuclear program cannot be reached. In response, Iran’s Defense Minister Aziz Nasirzadeh said on Wednesday that Iran would retaliate against U.S. bases in the region if conflict begins.
U.S. Special Envoy Steve Witkoff is expected to meet with Iranian Foreign Minister Abbas Araghchi in Oman on Sunday to discuss Tehran’s response to a new U.S. proposal.
Separately, U.S. crude inventories fell by 3.6 million barrels last week to 432.4 million, according to the Energy Information Administration—exceeding analyst expectations of a 2 million barrel draw.
