Oil Price Surge Halts After Trump Shuns Immediate Involvement In Iran-Israel Conflict

Brent crude futures slipped 2.9% to $76.59 per barrel, while the U.S. West Texas Intermediate crude fell 0.6% to $73.42 per barrel at 2.40 am ET.

Oil prices slipped on Friday after the White House said the U.S. will not immediately get involved in the armed tussle between Iran and Israel, allaying some concerns over a further escalation in the Middle East.

Brent crude futures slipped 2.9% to $76.59 per barrel, while the U.S. West Texas Intermediate crude fell 0.6% to $73.42 per barrel. Both contracts are still headed for weekly gains.

“Based on the fact that there’s a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks. That’s a quote directly from President Trump,” White House press secretary Karoline Leavitt told reporters on Thursday.

While the U.S. has described Israel’s initial strikes in Iran last week as ‘unilateral’ actions, Trump has said that he backed Benjamin Netanyahu’s government and asked Tehran for an ‘unconditional surrender.’

Oil prices rose 3% on Thursday after Israel attacked Iran’s Arak heavy water nuclear reactor. At the same time, Iran retaliated by striking the Soroka Medical Centre, after claiming that it was near an Israeli military and intelligence centre.

"The 'two-week deadline' is a tactic Trump has used in other key decisions. Often these deadlines expire without concrete action, which would see the crude oil price remain elevated and potentially build on recent gains," said Tony Sycamore, an analyst at IG, according to Reuters.

Most of the concerns among investors are centered around the Strait of Hormuz, through which approximately one-fifth of the world’s oil is shipped out.

Citi analysts predicted that a shutdown of the Strait could move oil prices to $90 per barrel. However, they noted that a prolonged halt to ships was unlikely.

Retail sentiment on Stocktwits about the United States Oil Fund was in ‘extremely bullish’ (81/100), while retail chatter was ‘extremely high.’

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