Oil prices experienced sharp declines on Thursday following remarks by US President Donald Trump that appeared to ease concerns about potential military action against Iran, a major crude producer. The comments helped reverse recent gains that had been driven by geopolitical tensions in the region.

Oil Market Performance

The main US oil contract showed significant weakness during Thursday's trading session:

WTI crude briefly fell more than 5% during the session before recovering slightly. The decline came after crude prices had surged in recent days amid concerns over possible disruption to global supplies.

Geopolitical Factors

Trump's remarks suggested a shift away from potential military intervention in Iran. The President indicated that he had been told the killings of protesters in Iran had stopped. Previous statements about coming to the aid of the Iranian people during demonstrations had sparked market concerns about supply disruptions.

"Oil prices are trading sharply lower after Trump signalled he is not taking military action against Iran," noted Victoria Scholar, head of investment at Interactive Investor.

Broader Commodity Impact

The volatility extended across commodity markets beyond oil:

• Silver: Plunged more than 7% in Asian trading after hitting a record high above $93.75 per ounce
• Gold: Dipped from recent record highs, affected by reduced safe-haven demand

The precious metals decline was also influenced by Trump holding off on imposing tariffs on critical minerals.

Technology Sector Boost

Despite commodity weakness, technology stocks found support from strong corporate earnings. Taiwan Semiconductor Manufacturing Company (TSMC) reported forecast-beating fourth quarter net profit, helping lift investor sentiment in the sector.

The tech-heavy Nasdaq Composite jumped nearly 1% as New York trading commenced. "A strong set of results from Taiwan Semiconductor Manufacturing Company quickly shifted the mood, reminding markets that enthusiasm around artificial intelligence and long-term growth themes remains very much alive," said Forex.com analyst Fawad Razaqzada.

US Labor Market Data

Labor Department data provided additional market context, showing first-time unemployment claims dipped back under 200,000 last week. Briefing.com analyst Patrick O'Hare noted this "corroborates a low firing-low hiring environment that will keep the Fed on watch but also on hold in terms of a rate cut this month and possibly until June."

With US inflation running above the Federal Reserve's 2% target and both labor market and economic conditions remaining stable, policymakers have indicated they will likely maintain current interest rates at this month's meeting.

Geopolitical tensions across Venezuela, Iran, and Ukraine have thrust crude oil back into the spotlight of global markets. The increasingly unpredictable environment, shaped by political instability, sanctions, and supply chain disruptions, has created a market driven more by risk premiums than traditional demand-supply fundamentals. Oil prices have remained volatile as investors navigate these complex dynamics.

Market Outlook and Price Projections

According to Ross Maxwell, Global Strategy Operations Lead at VT Markets, crude oil is expected to remain range-bound with sharp volatility spikes triggered by headlines. He notes that slowing global growth may cap the upside potential, while geopolitical turmoil provides a price floor, making oil a tactical rather than linear investment opportunity.

Manoj Kumar Jain of Prithvifinmart Commodity Research shares a similar outlook, pointing to recent geopolitical developments including the capture of the Venezuelan President, new trade sanctions against Iran, and ongoing Russia-Ukraine tensions as key drivers of crude oil volatility.

Recent Performance and Future Prospects

Data from 2025 reveals that crude oil closed the year with a sharp decline of over 15.00% in Indian markets, marking one of the worst performances among non-agricultural commodities. Despite this challenging performance, Jain remains optimistic about a technical base forming in the first half of 2026, supported by potential revival of global demand, easing trade tariffs, and accommodative US monetary policy.

Investment Strategy Recommendations

Ross Maxwell recommends avoiding direct exposure to crude as a commodity, instead suggesting well-managed energy equities such as refiners and integrated oil producers. These companies typically exhibit:

• Lower sensitivity to crude price swings
• Strong cash flows and disciplined capital allocation
• Dividend generation capabilities
• Partial hedge against inflation and global shocks

Jain advocates for a cautious but opportunistic approach, suggesting a staggered buying strategy in domestic markets within the ₹5,050 to ₹4,900 price range, with a stop loss at ₹4,640.

Strategic Positioning

Both analysts agree that crude oil should be treated as a tactical play within a diversified portfolio, providing stability during volatile periods rather than forming the core investment strategy. Maxwell emphasizes that while oil may not deliver consistent returns, it can offer resilience and diversification during periods of market stress. The focus remains on selectivity, discipline, and understanding global market cues to navigate this complex energy landscape effectively.