Oil prices declined around midday Thursday after US President Donald Trump said his administration does not plan to attack Iran before the November 3 midterm elections.
Brent crude, which had been inching toward $106 a barrel, fell to around $103.50 after Trump’s comments. West Texas Intermediate crude also declined, slipping from around $93 to roughly $91.
The retreat came after Trump said the US was engaged in discussions with Iran and ruled out an offensive against the Islamic Republic ahead of the elections.
What did Trump say?
Trump said on his social media platform Truth Social that his administration was having positive discussions with Iran and that there would be no US attack on the country before the midterm elections.
“We are having productive discussions with the Islamic Republic of Iran,” Trump wrote in a post on Truth Social.
Trump also added that the US blockade in the Strait of Hormuz was working and the same will continue even as he clarified that there were no plans of attacking Iran.
“We will not be attacking Iran at any time prior to the Midterm Elections to be held in the United States on November 3rd,” Trump said.
The conflict has also contributed to inflationary pressure, with diesel prices crossing $6 for the first time. The inflation impact of higher energy prices has become an important issue ahead of the November elections.
Oil still higher despite retreat
The comments eased some of the immediate fears of further escalation in the conflict and prompted a pullback in crude prices from their session highs.
The decline in oil prices came after reports that the Trump administration was planning to resume combat operations in Iran had pushed crude higher Thursday.
Even after the pullback following Trump’s remarks, oil remained sharply higher on the session. WTI crude was still up around 3%, while Brent crude was also trading above 3% higher on Thursday.
Geopolitical risk has remained a major driver of the oil market since the conflict began.
Attacks on tankers passing through the Strait of Hormuz reached their highest weekly level since the war began, adding to concerns about the security of key oil transportation routes in the Strait of Hormuz and Bab al-Mandeb.
Commodity-vessel traffic through Hormuz has also fallen to its lowest in more than two months.
Although oil supplies had stabilized, concerns about how durable that stability would be continued to support prices. The Houthi-Saudi Arabia conflict also added to supply concerns.
Supply disruptions have also emerged closer to the US.
Shell and Chevron curtailed offshore operations as Hurricane Isaias approached the US Gulf Coast.
By Wednesday, producers had shut about 25% of Gulf oil output and more than 16% of natural-gas production, putting additional pressure on prices.
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