West Texas Intermediate (WTI) trades around $89.50 on Thursday at the time of writing, down 0.86% on the day, as investors trim positions following the recent rally driven by Middle East tensions.
Despite renewed rhetoric between Washington and Tehran and stronger-than-expected US inflation data, the Oil market is facing profit-taking as prospects for a diplomatic agreement remain alive
According to several media reports, negotiations between the United States (US) and Iran over a permanent peace agreement remain ongoing despite the recent military strikes. A diplomatic source cited by CNN said that talks remain active, while The Wall Street Journal reported that US President Donald Trump conveyed a message to Tehran through Qatar indicating that the latest attacks did not represent a return to full-scale war. This perception of a more limited immediate threat to global supply is weighing on Oil prices, even as the geopolitical backdrop remains highly tense.
Earlier on Thursday, Donald Trump stated that the United States would hit Iran “very hard” overnight and raised the possibility of taking control of Kharg Island, Iran’s main Oil export terminal. Kharg Island accounted for roughly 90% of Iran’s Crude Oil exports before the conflict, highlighting its strategic importance. Meanwhile, US data continues to point to a tight Oil market.