NEW YORK: Global oil prices eased after hitting a four-year high of more than USD126 a barrel earlier on Thursday on concerns the US-Iran war could lead to a protracted Middle East supply disruption that could inflict deeper damage on the global economy.
The oil markets have been in a period of heightened volatility since the conflict in the Middle East began in late February.
Global oil benchmark Brent crude futures rose as high as USD126.41 a barrel, the peak since March 9, 2022, but settled down USD4.02, or 3.41 percent, to USD114.01. The prompt contract for June delivery expired on Thursday. The more active July contract settled higher at USD110.88, up 44 cents, or 0.4 percent.
WTI crude futures closed down USD1.81, or 1.69 percent, at USD105.07. The contract reached USD110.93 earlier, the highest since April 7.
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Still, both benchmarks are on track for their fourth month of gains, reflecting fears that the Iran conflict could choke global oil supplies for months to come.
The drop in prices from intraday highs did not have an obvious catalyst.
The decline did not look related to a specific development and reflected the heightened volatility in the market since the Iran war started, said Tamas Varga of PVM. Two large sell orders for June Brent traded earlier in the session, LSEG data showed. Other analysts said that prices can be volatile ahead of contract expiries.
“It’s massive movements, like intraday movements, as much as we usually have in months,” analyst Ole Hvalbye at SEB Research said. “It’s a mess… it’s very difficult to calculate and try to make up some fundamental view on this.”
“The market is realizing there might have been a bit of an overreaction yesterday,” Phil Flynn, senior analyst with Price Futures Group, noting that hedge funds were selling positions to lock in gains at the end of the month.
Others noted the retreat in US dollar strength on Thursday also put downward pressure on oil. Japan’s yen surged 3 percent, the most in a day in over three years on Thursday, following stark warnings from Tokyo officials that intervention to prop up the currency, as well as action in other markets including energy, could be imminent. The jump in the yen put the US currency down, on track for its biggest one-day drop against the yen since last August.
US President Donald Trump is slated to receive a briefing on Thursday on plans for a series of fresh military strikes on Iran to compel it to negotiate an end to the conflict, a US official told Reuters.
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