Oil dropped after the US close, reversing a day of gains after President Donald Trump said he had been assured Iran would stop killing protesters—signalling he may hold off on a threatened military response to the crackdown on widespread demonstrations.
West Texas Intermediate fell as much as 3% after settlement on Wednesday (Thursday AEDT), sliding to about $US59 a barrel before trimming losses. Prices had settled on Wednesday at $US62.02. Oil had risen in each of the past 5 sessions as traders awaited a US response to the unrest in Iran, with America moving military staff and Tehran warning neighbouring countries against assisting any attack.
Fears of disruption to Iran’s roughly 3.3 million barrels-a-day output—and key shipping lanes—had helped lift prices to their highest level since October. But sentiment turned after Trump told reporters in the Oval Office on Wednesday: “We’ve been told that the killing in Iran is stopping—it’s stopped.”
The comments reduced expectations of an imminent US military response to protests against the government of Supreme Leader Ayatollah Ali Khamenei. Trump said he would be “very upset” if the information proved untrue and the violent crackdown continued.
Oil has started the new year higher as turmoil in OPEC’s fourth-largest producer, alongside upheaval in Venezuela, rebuilt a risk premium after a run of five monthly losses driven by expectations of a supply glut.