Oil prices pulled back modestly on Thursday as traders weighed whether the previous day’s sharp rally had already priced in the rising geopolitical risks in the Middle East. Brent crude futures settled down 41 cents, or 0.6%, at $69.36 a barrel. U.S. West Texas Intermediate crude fell 11 cents, or 0.2%, to settle at $67.97 a barrel.
The retreat followed Wednesday’s surge of more than 4% — the strongest one-day gain in over two months — after the U.S. announced plans to move personnel out of the Middle East amid escalating tensions with Iran. Analysts noted that the rally pushed oil into overbought territory, prompting a technical correction.
Concerns remained elevated, however, as rhetoric intensified on both sides. President Trump expressed reduced confidence in reaching a nuclear agreement with Iran, warning of potential military strikes if talks fail. Tehran reiterated its intent to continue uranium enrichment and warned it would retaliate against any U.S. action.
Amid these developments, the UK maritime agency flagged the risk of rising military activity in the region, including threats to key shipping lanes. Analysts pointed specifically to the Strait of Hormuz — a critical chokepoint through which 20% of global oil flows — as a flashpoint. JPMorgan warned that any disruption there could spike oil prices to between $120 and $130 per barrel, though it assessed the probability of such a scenario as low.
Despite the geopolitical unease, markets appeared to stabilize as some short investors stepped aside, opting to wait for further developments. Talks between U.S. and Iranian officials are expected to resume in Oman over the weekend, while Iran now faces possible U.N. Security Council action after being declared in violation of non-proliferation rules by the International Atomic Energy Agency.