Oil prices fell on Thursday as investors hesitated to take new positions after US President Donald Trump gave mixed signals about the country's potential involvement in the ongoing Israel-Iran conflict.
Brent crude futures fell 37 cents, or 0.48%, to $76.33 a barrel by 0110 GMT after rising 0.3% in the previous session marked by high volatility, when prices fell as much as 2.7%.
U.S. West Texas Intermediate crude for July fell 28 cents, or 0.37%, to $74.86 a barrel, after rising 0.4% the previous day despite falling as much as 2.4%.
The July contract expires on Friday and the more active August contract fell 21 cents, or 0.29%, to $73.29 a barrel. There is still "a healthy risk premium embedded in prices as traders wait to see whether the next stage of the Israel-Iran conflict is a U.S. strike or peace talks," Tony Sycamore, market analyst at IG, said in a note.
The former could send prices up $5 while peace talks could send them down about the same amount, Sycamore said.
Trump told reporters on Wednesday that he may or may not decide for the U.S. to join Israel in its missile strikes against Iran. The conflict continued into its seventh day on Thursday.
Direct U.S. involvement would widen the conflict, putting energy infrastructure in the region at greater risk of attack, analysts said.
Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude. More importantly, about 19 million bpd of oil and oil products move through the key waterway of the Strait of Hormuz and there are widespread concerns that the fighting could disrupt trade flows there.
The U.S. Federal Reserve kept interest rates steady on Wednesday but forecast two rate cuts by the end of the year. However, Chairman Jerome Powell cautioned that rate cuts would be "data dependent" and that higher consumer inflation was expected from President Trump's planned import tariffs. Lower interest rates would stimulate the economy, and as a result demand for oil, but they could worsen inflation. (alg)
Source: Reuters
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