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Oil Prices Steady as US-Iran Spat Eases

Oil prices steadied on Thursday after signs of de-escalation of conflict between the US and Iran develop on US President Donald Trump’s move to not call for further military action against the Islamic Republic.

Crude oil West Texas Intermediate futures were up by 0.2% to $59.77 a barrel, while Brent oil futures gained 0.1% to $65.53 a barrel.

Both benchmarks edged higher earlier in the session after news of two rockets falling on Baghdad’s heavily fortified Green Zone.

Oil prices dropped nearly 5% on Wednesday after Trump announced to employ heavy sanctions on Iran instead of executing another military strike against the country.

The latest US inventory data from the Energy Information Administration (EIA) also put the energy commodities market in a gloomy mood. As crude stockpiles and gasoline inventories rose to their most in a week in four years.

US crude stocks unexpectedly grew by 1.2 million barrels in the week ended January 3 to 431.1 million barrels.

The country’s gasoline inventories also surprisingly increased by 9.1 million barrels in the week to 251.6 million barrels.

The energy market had expected to see a decline of 3.6 million barrels in oil stockpiles. There was also a rise of 2.7 million barrels in gasoline supplies.

Worse Case Scenario Aversion Causes Oil Prices to Ease

While Trump planned to respond to Iran’s attack with severe sanctions, the US President did not mention any plan of a counterattack.

The energy commodities complex saw the news as more dovish and a sign of cooling tensions between the two countries.

Trump’s latest statement helped global equities recover, while precious metals lost momentum.

Gold futures fell 0.7% to $1,548.15 per ounce on Thursday.

Trump’s decision came after Iran fired more than a dozen ballistic missiles at multiple military compounds housing US soldiers on Wednesday morning.

The airstrike took place hours after the funeral of Iranian Major-General Qasem Soleimani on Tuesday.  He was killed by a US drone attack at Baghdad International Airport last week.

Wednesday’s strike sparked concerns of further unrest in the Middle East. Traders increasingly worry the dispute might eventually disrupt global supplies.

Oil prices rose to their highest level immediately after reports of the incident.

Iran’s foreign minister Jawad Zarif later said the attack concluded proportionate measures. Moreover, the country was not seeking a further escalation of war.

The missile strike missed major energy infrastructures that could have led to worldwide disruption in crude inventories.

Trump confirmed no Americans were harmed during the attack. Supporting investors’ hope that there will not be a broader conflict between the two nations that could hinder oil flows.

The United Arab Emirates Energy Minister Suhail al-Mazrouei also stated earlier Wednesday that he saw no looming risk to oil going through the Strait of Hormuz.



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