Crude rallies on security threat, faltering nuclear talks, and risk of regional conflict
Oil prices jumped more than 4% on Wednesday as the United States ordered the departure of nonessential personnel from its embassy in Baghdad, escalating concerns of regional conflict amid rising tensions with Iran.
West Texas Intermediate (WTI) crude rose US$3.17, or 4.9%, to settle at US$68.15 per barrel. Brent crude, the international benchmark, gained US$2.90, or 4.3%, closing at US$69.77.
The move follows warnings from multiple US officials and military sources about unspecified security threats, as well as a growing impasse in nuclear negotiations between Washington and Tehran. The State Department cited “heightened threats in the region” and said the decision to reduce its diplomatic footprint was made to keep Americans safe.
Diplomatic exits and military precautions
The evacuation order applies to US missions in both Baghdad and Erbil. In parallel, Defense Secretary Pete Hegseth authorised the voluntary departure of military dependents across the Middle East. US Central Command said it was monitoring the situation closely.
The Royal Navy’s UK Maritime Trade Operations centre also issued a maritime alert, warning that increased regional tensions “could lead to an escalation of military activity having a direct impact on mariners.” The advisory covered the Persian Gulf, Strait of Hormuz, and Gulf of Oman—areas historically affected by Iranian activity.
Trump expresses doubt on Iran deal
President Donald Trump added fuel to the geopolitical fire during a podcast interview, saying he was “getting more and more less confident” that a nuclear deal with Iran could be reached. Speaking to the New York Post’s “Pod Force One”, he said Iran appeared to be stalling talks, and warned that any conflict would bring disproportionate losses to the US: “It would be nicer to do it without warfare… but I don’t think I see the same level of enthusiasm [from Iran].”
Iranian officials pushed back sharply. Defence Minister Gen. Aziz Nasirzadeh warned that all US bases in the region are within striking distance, adding that Iran would target them “without hesitation” if conflict erupted. A social media post from Iran’s UN mission said, “U.S. militarism only fuels instability.”
Oil volatility amid nuclear uncertainty
Iran, a major oil producer, remains at the centre of nuclear talks that had been scheduled for a sixth round this weekend in Oman, though US officials now say that meeting is increasingly unlikely.
Meanwhile, Israel has reportedly urged Trump to approve a military strike on Iranian nuclear sites, though he has so far resisted in favour of a diplomatic solution. Trump has insisted that any new deal must eliminate Iran’s domestic uranium enrichment capability—a position Iran has firmly rejected.
Market outlook: heightened risk premium
Oil markets, already recovering from an April slump, reacted strongly to the prospect of further instability in the Middle East. Both Brent and WTI are still down for the year—by around 6% and 4% respectively—but traders are now pricing in a higher risk premium amid fears of military escalation.
