Oil Prices Slip in Choppy Trading as Markets Watch U.S. Moves on Iran and React to Dollar Strength
Oil prices declined in volatile trading on Thursday as uncertainty over potential U.S. involvement in the Israel-Iran conflict rattled markets. A recent surge in crude prices also began to face headwinds from a strengthening U.S. dollar.
In early Asian trading, crude fell as much as 1%, but quickly pared losses after a Bloomberg report suggested U.S. officials were preparing for a possible military strike on Iran, possibly as soon as this weekend.
By 21:56 ET (01:56 GMT), Brent crude futures for August were down 0.4% at $76.39 per barrel, while West Texas Intermediate (WTI) fell 0.2% to $73.34 per barrel.
Bloomberg: U.S. Prepping for Potential Weekend Strike on Iran
According to Bloomberg, American officials are reportedly making contingency plans for a strike against Iran in the coming days, potentially over the weekend. However, the report noted that details remain uncertain and no formal announcement has been made.
President Donald Trump has taken a tough line on Iran this week, calling for its “immediate surrender.” However, he stopped short of confirming direct U.S. military involvement and hinted at the possibility of resuming nuclear negotiations with Tehran.
A U.S. military strike would likely mark a major escalation in the ongoing conflict. Iran has issued warnings against any such action.
Meanwhile, Iran and Israel continued exchanging airstrikes on Thursday, pushing the confrontation into its seventh consecutive day.
Crude prices had surged since last Friday amid rising fears of supply disruptions linked to the conflict. On Wednesday, prices were further supported by data showing a larger-than-expected drop in U.S. oil inventories.
Dollar Strength Cools Oil Rally
Despite geopolitical risks, oil’s rally began to lose momentum as the U.S. dollar strengthened. A firmer dollar typically makes commodities like crude more expensive for international buyers, dampening demand.
The greenback climbed sharply on Wednesday after the Federal Reserve left interest rates unchanged and signaled a cautious stance on future rate cuts. Fed Chair Jerome Powell warned that inflation could accelerate due to President Trump’s proposed tariffs, and emphasized that any rate adjustments would depend on incoming economic data.
This caution came amid weak economic indicators, with U.S. retail sales and industrial production both falling short of expectations in May—highlighting vulnerabilities in the world’s largest energy-consuming economy.
Nonetheless, analysts expect fuel demand in the U.S. to rise in the coming months, driven by increased travel during the summer season.
