Crude oil futures pulled back after a more than 4% jump

Crude oil futures slipped on Thursday, easing back after a sharp rally in the previous session driven by concerns that Israel and Iran could be on the verge of open conflict.

By 11:15 a.m. Eastern Time, US West Texas Intermediate futures were down 54 cents, or 0.8%, settling at $67.61 a barrel. At the same time, the global benchmark Brent contract dropped 56 cents, also 0.8%, to $69.22 per barrel.

The pullback came after prices jumped more than 4% in the previous session, when traders reacted to mounting fears that a clash between Israel and Iran would threaten crude supplies flowing from the Middle East.

According to five people familiar with the matter who spoke to NBC News, Israel is weighing a military strike against Iran “in the coming days” even if it does not have explicit U.S. backing. That report sent shocks through energy markets.

In response to rising tensions, the US State Department ordered non-essential personnel to leave Iraq, while the Pentagon authorized the voluntary departure of military families stationed across the Middle East. Those moves followed a warning from Iran’s defense minister that his country would target US bases throughout the region if the situation became hostile.

Oil analysts at JP Morgan placed a worst-case price tag on the situation. Natasha Kaneva, head of global commodities research at the bank, told clients in a Thursday note that crude could spike to $120 per barrel or higher if Iran were to close the Strait of Hormuz. About 30% of the world’s seaborne oil trade passes through that narrow waterway.

“Crucially, for all of recorded history, despite many threats, the Strait of Hormuz has never been closed off. Crude oil continued to flow,” Kaneva wrote.

Political pressure has been building for months

President Donald Trump has publicly warned that the U.S. or Israel might carry out airstrikes against Iran’s nuclear sites if diplomatic talks failed. In turn, Iran’s defense minister struck a cautiously hopeful tone about negotiations but made it clear that it would retaliate.

“In that case, America will have to leave the region, because all of its bases are within our reach. We have access to them, and without hesitation, we will target all of them in the host countries,” he told Iranian media this week.

On Thursday, the Board of Governors of the International Atomic Energy Agency adopted a resolution declaring Iran in non-compliance with its nuclear safeguards obligations. It was the first such finding against Iran in nearly two decades.

Meanwhile, U.S. Middle East envoy Steve Witkoff is scheduled to meet Iranian Foreign Minister Abbas Araghchi in Oman on Sunday for another round of discussions aimed at reviving the stalled nuclear talks.

Israel may still consider military action against Iran

Despite these diplomatic efforts, sources cited by NBC News say Israel is still considering military action in the days ahead. Political analysts warn that a clash between the two countries, especially given Iran’s population of 93 million, nearly four times that of Iraq, would have far-reaching effects on global markets, regional stability, and the world economy.

Yet many market watchers and strategists believe a full-scale confrontation remains unlikely, for now. Some argue that recent partial evacuation orders and military posturing amount to deliberate pressure tactics designed to strengthen the US hand at the negotiating table.

Iran insists on its right to pursue a civilian nuclear program under the Nuclear Non-Proliferation Treaty, which it joined in 1970. One proposal would allow Iran to enrich uranium at low levels, due to which Iran’s facilities would not get dismantled, allowing the country to retain the infrastructure for peaceful purposes such as energy generation.

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