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Oil prices decline due to geopolitical uncertainty ahead of US-Iran talks
On Thursday, 12 June, Brent crude oil futures fell by 0.4% to $69.47 per barrel, while WTI lost 0.3% to settle at $67.92. This happened after rising by more than 4% the day before, amid geopolitical tensions around Iran.
According to Reuters, the decline in prices was caused by the market’s reaction to the news of the withdrawal of US personnel from the Middle East and the US preparations for talks with Iran over its nuclear programme. Although the risks of escalation remain, market participants are partially revising their expectations of an immediate conflict.
“The geopolitical premium that is keeping Brent above $65 will remain until there is clarity on the nuclear talks,” said Vivek Dhar of Commonwealth Bank Australia.
President Donald Trump said he would not allow Iran to acquire nuclear weapons, while expressing scepticism about reaching an agreement. If the talks fail, Trump said, the United States is ready to take decisive action. Iran, on the other hand, threatens to strike US bases in the region in case of escalation.
According to OANDA analyst Kelvin Wong, the decline is also partly due to the achievement of technical resistance levels, after which speculators began to take profits.
Meanwhile, according to the EIA, crude oil stocks in the US fell by 3.6 million barrels, which is more than analysts had expected (2 million barrels), which is usually a positive signal for prices. However, amid geopolitical turbulence, this factor has lost its crucial importance.
