Oil Prices Slide More Than 4% as Trump’s Iran Remarks Deflate Risk Premium

Oil prices suffered a sharp reversal on Thursday, closing more than 4% lower, as a shift in political tone from Washington erased much of the geopolitical risk premium that had propelled prices to multi-month highs.

The decline followed comments by former U.S. President Donald Trump indicating a more cautious, wait-and-see approach toward Iran, easing fears of an imminent military escalation that could disrupt global oil supplies. The remarks marked a clear departure from the tougher rhetoric that had dominated markets in recent days.

Brent crude futures fell 4.15% to settle at $63.76 a barrel, while U.S. West Texas Intermediate dropped 4.56% to $59.19. Both benchmarks had recently touched their highest levels since September, before sentiment shifted abruptly.

Latest Oil Prices:

WTI Crude • 59.34 +0.15 +0.25%

Brent Crude • 63.76 -2.76 -4.15%

Murban Crude • 64.81 -2.15 -3.21%

Louisiana Light • 61.80 +1.46 +2.42%

Bonny Light • 78.62 -2.30 -2.84%

Opec Basket • 63.30 +0.52 +0.83%

Mars US • 70.06 -0.92 -1.30%

Gasoline • 1.786 +0.003 +0.14%

Natural Gas • 3.141 +0.013 +0.42%

In recent sessions, oil markets had been pricing in a heightened probability of U.S. action against Iran, pushing prices higher on concerns over potential supply disruptions. Trump’s softer language quickly altered those expectations, prompting traders to unwind positions built on geopolitical risk.

“Markets moved from a high-probability escalation scenario to a significantly lower one in a single session,” analysts said, underscoring the outsized influence political signals continue to exert on energy markets.

Brent crude had climbed to $66.82 on Wednesday, its strongest level in months, before surrendering much of those gains as risk perceptions recalibrated.

Adding to the bearish momentum, data from the U.S. Energy Information Administration showed crude oil and gasoline inventories rose more than analysts had forecast last week. The figures reinforced concerns about oversupply at a time when the market remains acutely sensitive to changes in fundamentals.

Supply-side pressures were further compounded by developments in Venezuela. According to sources cited by Reuters, the country has begun reversing production cuts implemented under U.S. sanctions, resuming oil exports and raising expectations of increased global supply.

Sentiment was also influenced by reports of a positive phone call between Trump and Venezuela’s interim vice president Delcy Rodríguez, fueling speculation of a period of relative stability that could allow additional Venezuelan crude to reach international markets.

On the demand front, the Organization of the Petroleum Exporting Countries (OPEC) struck a more measured tone, projecting global oil demand growth in 2027 at a pace broadly in line with this year. The group also pointed to near-balanced supply and demand conditions in 2026.

Meanwhile, official data showed China’s crude oil imports surged 17% year on year in December, while total imports for 2025 rose 4.4%, with average daily volumes reaching record levels. The figures provide a degree of medium-term support for prices, despite near-term volatility.

The latest sell-off highlights the fragile equilibrium underpinning oil markets, where political rhetoric, inventory data, and shifting supply dynamics can rapidly override longer-term fundamentals. As traders reassess risk in real time, oil prices appear set to remain highly reactive, and highly volatile, in the weeks ahead.