Oil plunged 4% as Trump rhetoric defuses Iran supply-risk premium

Oil prices plummeted on Thursday, snapping a five-day rally as de-escalating rhetoric from the White House regarding Iranian civil unrest prompted traders to aggressively unwind geopolitical risk premiums. The reversal was compounded by bearish domestic inventory data and signs of a structural supply recovery in South America.

Brent crude settled down $2.76, or 4.15%, at $63.76 a barrel. 

WTI crude fell $2.83, or 4.56%, to $59.19.

The primary catalyst for the sell-off was a shift in posture from US President Donald Trump, who indicated that the lethal crackdown on Iranian protesters appeared to be losing intensity. These comments effectively neutralised fears of imminent US military intervention, which had previously propelled Brent to a four-month high of $66.82 just 24 hours prior. 

Adding to the downward pressure, the Energy Information Administration (EIA) reported a larger-than-expected build in US crude and gasoline inventories. This fundamental surplus was further reinforced by developments in Venezuela, where exports are reportedly resuming following a productive diplomatic exchange between Washington and Caracas. Analysts suggest that the return of Venezuelan barrels will act as a significant anchor on global prices through the first quarter of 2026.

Despite the sharp intraday decline, long-term demand signals remained mixed. While OPEC forecasts a balanced market for 2026, record-high Chinese import data for December—showing a 17% year-on-year increase—suggests that underlying consumption in Asia remains a critical, albeit volatile, floor for the market.

Written by: Aiman Haikal