WASHINGTON (dpa-AFX) - Reversing yesterday's surge, crude oil prices have plunged on Thursday after U.S. President Donald Trump recalled his earlier orders to attack Iran hard.
WTI Crude Oil for July month delivery was last seen trading down by $2.81 (or 3.12%) at $87.22 per barrel.
The U.S.-Iran war entered day number 104 today.
Days before, U.S. President Donald Trump assured that a U.S.-Iran deal will materialize in a couple of days and stated that the Strait of Hormuz will reopen quickly.
Market participants welcomed the announcement, and the prospects of the resumption of oil and energy trade transit across the Strait of Hormuz lowered supply concerns.
However, on Tuesday a U.S. Apache helicopter patrolling the Strait of Hormuz was downed by Iran. Infuriated by this, Trump vowed to respond fiercely.
Trump was also displeased by Iran slowing the negotiations in reaching a deal with the U.S. and asserted that Iran will pay for the delay.
Later, U.S. forces hit several targets in Iran and Iran countered by attacking U.S. bases in Bahrain, Jordan, and Kuwait.
Today, the U.S. and Iran traded attacks for the second day.
Trump announced through his social media platform Truth Social that Iran would be hit very hard tonight and U.S. forces would take over the control of Iran's Kharg Island.
Drawing comparison to the U.S. takeover of Venezuelan oil trade through a short and sudden military offensive months before, Trump stated that the U.S. will assume total control of Iran's oil and gas markets.
Iran top military command, Khatam al-Anbiya Central Headquarters warned that Iran will ensure there will be oil and gas for all or else for none.
In an interview with Fox News, Trump stated that he always preferred the U.S. takeover of Kharg Island but was unsure if the U.S. citizens could withstand a major escalation.
Despite plans for a military offensive, Trump reiterated that the U.S. is continuing talks with Iran to arrive at a deal.
With war concerns increasing, traders avoided big moves, pushing oil prices on the upside.
However, hours before the strikes were set to begin, Trump messaged via Truth Social that the highest level of Iranian leadership and neighboring countries of Iran have approved the final draft of a deal with the U.S., and hence, he had called off the planned strikes.
Trump added that the time and place of signing will be announced shortly but stressed that the naval blockade on Iranian ports will remain in force until the deal is formally signed.
As chances of reopening of the strait grew brighter, oil prices gave ground and turned lower.
In its monthly report, the Organization of Petroleum Exporting Countries lowered its forecast for global oil demand growth for 2026 to 970,000 barrels per day.
Of note, the report mentioned that Iran's crude production nosedived more than 18% last month due to the ongoing U.S. naval blockade on all ships entering or exiting Iranian ports.
Iran's output has fallen by 546,000 barrels per day to 2.33 million bpd.
The U.S. dollar index was last seen trading at 99.85, down by 0.20 points (or 0.20%) today.
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