Decline in Oil Prices as Trump Takes a Softer Approach on Iran, Stocks Rebound

Post by : Bianca Suleiman

Oil prices experienced a notable drop on Thursday as US President Donald Trump adopted a more conciliatory tone toward Iran, alleviating concerns over potential disruptions in global oil supplies. In tandem, US stock markets showed signs of recovery following two days of decline.

Both Brent North Sea and West Texas Intermediate oil benchmarks saw a decline exceeding four percent. This shift followed Trump's comments on Wednesday indicating he would “watch it and see” regarding possible US actions in Iran, alongside his assertion that reports of protester killings had ceased.

Crude prices had surged recently due to Trump's expressions of support for the Iranian populace amid unrest, igniting worries regarding supply interruptions. However, his softened remarks helped diminish geopolitical uncertainties impacting the oil market.

“As tensions ease between Iran and the US, the political risk premium is quickly being stripped from oil prices,” noted Kathleen Brooks, research director at XTB.

In the stock market, renewed investor confidence was propelled by promising earnings reports. Taiwanese semiconductor giant TSMC announced stronger-than-expected fourth-quarter profits, bolstering tech stocks. The Nasdaq edged up over one percent at the session's start, led by gains in significant semiconductor firms.

Later in the day, however, some profit-taking occurred in larger tech and chip stocks, according to analyst Patrick O’Hare from Briefing.com.

Earlier dampening US equities were comments from US Commerce Secretary Howard Lutnick, warning that semiconductor firms not based in the US could face tariffs soaring to 100 percent.

Despite the fluctuations, all three prominent US indices finished positively. The S&P 500 saw a 0.3 percent increase. Shares for Morgan Stanley and Goldman Sachs surged by 5.8 percent and 4.6 percent, respectively, thanks to robust profits linked to heightened mergers and acquisitions.

In Europe, London's FTSE 100 achieved a new record high, buoyed by data indicating a rebound in the UK economy during November. Frankfurt's market experienced growth as Germany narrowly sidestepped a third consecutive year of recession with slight economic expansion expected in 2025. Paris stocks faced slight losses, pressured by a dip in TotalEnergies shares due to decreasing oil prices.

Asian markets displayed mixed results. Tokyo closed down by 0.4 percent after recent gains, speculating that Prime Minister Sanae Takaichi might soon call an early election amid favorable approval ratings.

In commodities, silver prices fell by 0.3 percent after a prior drop exceeding seven percent. Gold prices also saw a modest decline, retreating from earlier highs.