Oil prices plunged after President Donald Trump said he believed Tehran was “standing down” from its retaliation after the U.S. killed a top Iranian general on Thursday.
Iran fired missiles at U.S. military bases in Iraq late on Tuesday, though no U.S. fatalities were reported. Oil prices spiked last week and again after the Tuesday attack as investors worried that supplies could be disrupted in the Middle East, only to fall back again in response to signs that tensions are diminishing.
The Energy Information Administration also released data on crude oil and refined products, such as gasoline, that showed supplies of the commodities are rising. Higher supplies raise concerns about a glut at a time when global demand growth has been slow.
Brent crude futures, which had briefly risen above $70 on Monday, fell 4.1% to $65.44. West Texas Intermediate, or WTI, fell 4.9% to $59.61.
Oil traders have been wary about rallies sparked by geopolitical events. Crude initially jumped 20% after Saudi Arabian oil facilities were attacked in September, only to retreat to prior levels two weeks later.
The Middle East is also a less powerful player in the oil market than it was several decades ago. Trump emphasized U.S. independence in the Wednesday speech in which he said Iran may be standing down, making it clear that disruptions to Middle Eastern oil supplies won’t affect the U.S. economy the way they did in the 1970s.
“We are now the number one producer of oil and natural gas anywhere in the world,” Trump said. “We are independent and we do not need Middle East oil.”
Stocks of oil producers fell in afternoon trading. Concho Resources (ticker: CXO), for example, was down 2%.
Write to Avi Salzman at avi.salzman@barrons.com
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January 09, 2020 at 03:58AM
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Oil Prices Drop Sharply as Worry Over Iran Attacks Fades - Barron's
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