Oil Prices Fall as Markets Weigh Trump's 'Deal' Comments Against U.S.-Iran Strikes

Oil prices slipped on Thursday, reversing some of the prior session's sharp gains, as traders weighed the impact of escalating military hostilities between the United States and Iran against comments from President Donald Trump indicating Tehran may want to "make a deal."

Market Reaction and Key Prices

The sell-off came after a significant rally on Wednesday driven by the renewed conflict. As of 14:57 ET (18:57 GMT), key oil benchmarks were lower:

• Brent crude futures for September delivery, the global benchmark, fell 2.7% to $75.88 a barrel.
• West Texas Intermediate (WTI) crude futures, the U.S. standard, dropped 2.6% to $71.64 a barrel.

The decline followed a session where Brent surged over 5% and WTI added more than 4%, with both benchmarks closing at their highest levels since mid-June, according to Investing.com data.

Geopolitical Tensions Escalate

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The geopolitical risk premium had returned to the market after the U.S. military launched retaliatory strikes against approximately 170 targets in Iran over Tuesday and Wednesday. The action was a response to recent attacks on three commercial oil tankers. According to U.S. officials, the strikes targeted air defense systems, missile and drone storage sites, and Islamic Revolutionary Guard Corps naval assets. Iranian state media reported that its armed forces responded by striking U.S. bases in the region.

Speaking at a NATO summit, President Trump stated that a recent ceasefire was "over" and that the U.S. would hit Iran "20-to-1" in retribution for any attacks. However, he later told reporters that Iran had "called a little while ago" because "they want to make a deal so badly," which appeared to temper market fears of a wider conflict.

Supply Risks and Analyst Views

The renewed hostilities cast doubt on the recovery of oil exports through the Strait of Hormuz, a critical maritime chokepoint. Shipping tracker Kpler noted on Thursday that the latest attacks have "weakened confidence in the reopening" of the waterway. Analysts at ANZ warned the escalation had rebuilt a risk premium into prices and that a collapse of the interim U.S.-Iran understanding could interrupt Gulf exports.

Despite these supply threats, traders appeared to focus on the possibility of de-escalation. "Whilst the situation in the Middle East continues to deteriorate, the oil price has actually fallen today as markets bet that whilst Trump might not chicken out, he’s also unlikely to have the appetite for the war with Iran to continue for long," said Danni Hewson, head of financial analysis at AJ Bell.