Oil prices declined by over 2% during early Asian trading on Thursday following remarks from U.S. President Donald Trump, who indicated that the fatalities resulting from Iran’s response to widespread protests were diminishing. This development has alleviated fears regarding potential military intervention in Iran and the associated risks to supply chains. Brent futures experienced a decline of $1.67, representing a 2.5% decrease, settling at $64.85 per barrel at 0109. Meanwhile, U.S. West Texas Intermediate crude saw a reduction of $1.54, also a 2.5% drop, bringing it to $60.48 per barrel. Both benchmarks concluded Wednesday with an increase exceeding 1%, yet subsequently relinquished a significant portion of those gains following Trump’s comments, which alleviated concerns regarding a possible U.S. military action against Iran.

On Wednesday afternoon, Trump stated that he had received information indicating a decline in the killings of anti-government protesters in Iran, expressing his belief that there was no intention for large-scale executions. Selling pressure prevailed on expectations that the U.S. would not take military action against Iran,” stated Hiroyuki Kikukawa. Bearish factors also encompass larger-than-anticipated U.S. crude inventories, he stated. While geopolitical risks remain elevated and unexpected occurrences may disturb the supply-demand equilibrium, WTI is expected to fluctuate within the $55-$65 range for the foreseeable future,” Kikukawa stated. The United States is in the process of withdrawing certain personnel from military installations in the Middle East, according to a U.S. official’s statement on Wednesday. This development follows remarks from a senior Iranian official indicating that Tehran has communicated to neighboring countries its intention to target American bases should Washington initiate strikes.

In a development that exerts additional pressure on prices, U.S. crude and gasoline inventories increased beyond analysts’ expectations last week, according to the report on Wednesday. Crude stocks increased by 3.4 million barrels to reach 422.4 million barrels in the week ending January 9, contrasting with analysts’ forecasts of a 1.7 million-barrel decline. In a development that underscores the prevailing bearish sentiment, Venezuela has initiated a reversal of oil production cuts previously implemented in response to a U.S. embargo, with crude exports also reportedly resuming, according to three sources cited by Reuters.

On the demand side, the Organization of the Petroleum Exporting Countries indicated on Wednesday that oil demand is expected to increase at a comparable rate in 2027 as it has this year. They also released data suggesting a near equilibrium between supply and demand in 2026, which stands in contrast to other predictions of a significant surplus. In December, China’s crude oil imports experienced a 17% increase compared to the previous year, according to government data. Additionally, total imports for 2025 rose by 4.4%, with daily crude import volumes reaching unprecedented levels in December and throughout the entirety of 2025.