Oil Prices Dip as Market Eyes Trump’s Stance on Israel-Iran Conflict

Oil prices fell slightly on Thursday as investors remained cautious amid uncertainty over U.S. involvement in the escalating Israel-Iran conflict. Brent crude futures declined 37 cents (0.48%) to $76.33 a barrel by 0110 GMT, following a volatile session in which prices swung by nearly 3%. U.S. West Texas Intermediate (WTI) crude for July slipped 28 cents (0.37%) to $74.86, after briefly dropping 2.4% before ending 0.4% higher the previous day.

With the July WTI contract expiring Friday, the more actively traded August contract dipped 21 cents (0.29%) to $73.29.

Market analyst Tony Sycamore of IG noted that prices still reflect a risk premium as traders await clarity on whether the U.S. will strike Iran or pursue peace talks. A U.S. strike could push oil prices up by $5, while peace efforts may cause a similar decline.

President Donald Trump added to the market's uncertainty by stating he has not yet decided whether to join Israel’s missile campaign against Iran. The conflict, now in its seventh day, continues to threaten Middle Eastern energy infrastructure, particularly the vital Strait of Hormuz, through which nearly 19 million barrels per day of oil and oil products flow. Iran, OPEC’s third-largest producer, pumps around 3.3 million bpd.

Meanwhile, the U.S. Federal Reserve held interest rates steady on Wednesday but signaled two potential rate cuts this year. Fed Chair Jerome Powell emphasized the cuts would be data-driven and warned that Trump’s proposed import tariffs could fuel inflation. While lower interest rates may boost oil demand by stimulating economic activity, they also risk intensifying inflationary pressures, adding another layer of complexity for energy markets.