Oil prices fell almost 3% during Asian trading on Thursday, ending a five-day rally after U.S. President Donald Trump signalled a more cautious approach toward Iran. His comments helped ease concerns over potential near-term supply disruptions that had recently driven prices higher.
March-expiry Brent crude futures slid 2.8% to $64.67 a barrel by 20:25 ET (01:25 GMT), while U.S. West Texas Intermediate (WTI) futures dropped about 3% to $60.22 a barrel.
The pullback followed a sharp rally of more than 10% over the previous five sessions, which had pushed prices to multi-month highs amid fears that escalating unrest in Iran could lead to U.S. military action and disrupt oil production or shipping routes.
Trump softens tone on Iran
On Wednesday, Trump said he had received assurances that Iranian authorities would halt the killing of protesters and that there were currently no plans for mass executions. He added that this reduced the likelihood of an immediate U.S. military response to protests against the government of Supreme Leader Ayatollah Ali Khamenei.
These remarks helped deflate the risk premium that had built into oil prices, as traders reassessed the chances of escalation involving Iran, one of OPEC’s largest producers. Until now, tensions surrounding Iran had underpinned the recent surge in crude, with markets focused on possible disruptions to output or key shipping lanes.
Venezuela talks add to pressure
Oil prices also faced additional headwinds after Trump hinted at improved engagement with Venezuela, another major oil producer currently under U.S. sanctions.
Trump said he held a positive call with Venezuela’s interim leader Delcy Rodríguez, noting discussions on oil, minerals, trade and national security. He added that progress was being made to support Venezuela’s stabilisation and recovery.
Market participants said any improvement in U.S.-Venezuela relations could eventually allow more Venezuelan crude to reach global markets, easing supply concerns further.
U.S. inventories surprise to the upside
Beyond geopolitics, investors were also reacting to signs of rising U.S. oil inventories. Data from the Energy Information Administration showed crude stockpiles rose by 3.4 million barrels last week, sharply contrasting with expectations for a 1.7 million-barrel decline.
Gasoline inventories jumped by 9 million barrels, while distillate stocks were largely unchanged, reflecting higher refinery output and increased imports. The unexpected builds highlighted ample supply in the world’s largest oil consumer and weighed on near-term bullish sentiment.
