Oil prices fell in volatile trade on Thursday amid heightened speculation over whether the U.S. will become involved in the Israel-Iran conflict, with a recent run-up in crude also facing some resistance from a stronger dollar.
Oil prices had initially fallen as much as 1% in early Asian trade, but sharply cut their losses after Bloomberg reported that U.S. officials were preparing for the possibility of an attack on Iran by as soon as this weekend.
Brent oil futures for August fell 0.4% to $76.39 a barrel, while West Texas Intermediate crude futures fell 0.2% to $73.34 a barrel by 21:56 ET (01:56 GMT).
US preparing for potential Iran strike by as soon as this weekend- Bloomberg
U.S. officials are preparing for a potential strike against Iran in the coming days, with the weekend being considered as a potential window for an attack, Bloomberg reported on Thursday.
But the situation over U.S. involvement still remained largely unclear, the report said.
President Donald Trump presented a hardline stance against Iran this week, but stopped short of stating whether the U.S. will become directly involved in the conflict. Trump called for Tehran’s immediate surrender, but was still seen touting the possibility of nuclear talks with the Islamic republic.
A direct U.S. strike against Iran could mark a major escalation in the conflict, with Iran having warned against such a possibility.
Iran and Israel continued to launch attacks against each other on Thursday, marking the seventh day of their renewed conflict.
Oil prices had risen sharply since Friday on concerns of increased supply disruptions from the conflict, and were trading close to their highest levels since late-January.
Data showing a bumper draw in U.S. oil inventories also boosted prices on Wednesday.
Oil rally cools on stronger dollar
But oil prices appeared to be facing some resistance after a strong run-up in the past week, with strength in the dollar limiting further gains in crude.
The greenback rose sharply on Wednesday after the Federal Reserve kept interest rates unchanged and downplayed the potential for more interest rate cuts, amid heightened uncertainty over the U.S. economy and inflation.
Chair Jerome Powell said that inflation was likely to increase from Trump’s planned trade tariffs, and that any interest rate cuts will be largely data-dependent.
Powell’s comments come after data earlier this week showed U.S. retail sales and industrial production both missed expectations in May, outlining some economic cracks in the world’s biggest fuel consumer.
But U.S. fuel demand is expected to pick up in the coming months, amid increased travel during the summer season.
Source : Investing