Oil prices dip as Trump’s uncertainty on Iran and Fed’s pause weigh on sentiment
SINGAPORE: Oil prices slipped on Thursday as investors remained cautious amid unclear signals from US President Donald Trump over possible American involvement in the Israel-Iran conflict, and after the Federal Reserve held interest rates steady while flagging potential cuts later this year.
Brent crude declined 20 cents, or 0.26 per cent, to $76.50 a barrel by 4:21 a.m. GMT, following a 0.3 per cent gain in the previous session that had seen sharp swings of up to 2.7 per cent.
US West Texas Intermediate (WTI) for July delivery eased 4 cents to $75.10, down 0.05 per cent, after rising 0.4 per cent on Wednesday when it briefly tumbled as much as 2.4 per cent. The July contract expires on Friday. The more active August WTI contract was trading 8 cents lower at $73.42.
Traders are holding back amid uncertainty over the next phase of the week-old Israel-Iran war, particularly whether the US will intervene directly. “There’s still a solid risk premium priced in as markets wait to see if the next step is escalation or diplomacy,” said IG market analyst Tony Sycamore in a note.
Goldman Sachs estimates that geopolitical risks are adding about $10 a barrel to oil prices, citing reduced Iranian supply and the possibility of broader regional disruption that could push Brent beyond $90.
Trump on Wednesday left open the possibility of US military involvement, telling reporters he had not yet decided on supporting Israeli strikes. The ambiguity has added to market anxiety, with analysts warning that a direct US strike on Iran would risk wider conflict and potential attacks on key oil infrastructure across the region.
Priyanka Sachdeva, senior analyst at Phillip Nova, said energy markets are “on edge” due to Trump’s unpredictable stance, which has long been a source of global market volatility.
Iran, a major oil producer within OPEC, currently pumps around 3.3 million barrels per day. The country borders the Strait of Hormuz, a strategic chokepoint through which nearly 19 million barrels per day of crude and oil products transit. Any military escalation could disrupt this vital route and squeeze global supply.
In a separate development, the US Federal Reserve kept interest rates unchanged on Wednesday, while signalling two rate cuts could come later in the year. Fed Chair Jerome Powell said any policy move would depend on economic data, and warned that inflation could pick up again due to tariffs proposed by Trump on imported goods.