WTI falls to near $66.50, downside seems limited due to escalating Middle East tensions

• WTI price may regain its ground due to supply concerns amid rising tensions between Israel and Iran.
• CBS journalist reported that US officials have been told that Israel is fully prepared to launch an operation into Iran.
• Oil prices may receive support from improved optimism for energy demand as US-China trade tensions ease.

West Texas Intermediate (WTI) Oil price pulled back from a two-month high of $67.82, currently trading around $66.50 per barrel during the early European hours on Thursday. However, the crude Oil prices may regain their ground due to increased fears over supply disruptions, sparked by the escalating tensions between Israel and Iran.

According to a Reuters report, the United States (US) decided to scale back American personnel in the Middle East. CBS News senior White House correspondent Jennifer Jacobs reported that US officials have been told that Israel is fully ready to launch an operation into Iran.

US President Donald Trump said on Wednesday that the US would not permit Iran to have a nuclear weapon, per Reuters. The US and Iran are expected to meet on Sunday for nuclear talks. Axios reporter Barak Ravid reported that White House envoy Steve Witkoff is going to meet Iranian Foreign Minister Abbas Araghchi in Muscat on Sunday to discuss the Iranian response to the recent US proposal.

Oil prices also receive support as optimism for energy demand increases amid easing trade tensions between the US and China, the two largest Oil consumers. Trump posted on Truth Social on Wednesday, saying that the trade deal with China is done and added that it is subject to his and Chinese President Xi Jinping's final approval. "We are getting a total of 55% tariffs, China is getting 10%. Relationship is excellent! Thank you for your attention to this matter," Trump said on Wednesday.

However, China is prepared to grant only six-month rare-earth export licenses for US automakers and manufacturers, which shows that China wants to have control over critical minerals as leverage in future talks, per the Wall Street Journal (gated).

Moreover, the US Energy Information Administration (EIA) released Crude Oil Stocks Change, showing a decline of 3.6 million barrels in Oil inventories in the previous week, exceeding forecasts of a 2 million-barrel decline.