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Trump unpredictability keeps investors on edge

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Goldman Sachs pegs risk premium at $10 a barrel

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US crude stockpiles fall sharply

By Enes Tunagur

LONDON, June 19 (Reuters) - Oil prices rose on Thursday

after Israel and Iran continued to exchange missile attacks

overnight and U.S. President Donald Trump's stance on the

conflict kept investors on edge.

Brent crude futures rose 36 cents, or 0.5%, to

$77.06 a barrel by 0913 GMT. U.S. West Texas Intermediate crude

for July was up 54 cents, or 0.7%, at $75.68. Brent had

surged to its highest in nearly five months at $78.50 on June

13, when Israel began its attacks.

The conflict entered its seventh day on Thursday after Israel

struck a key Iranian nuclear site and Iranian missiles hit an

Israeli hospital.

There is still a "healthy risk premium baked into the price

as traders wait to see whether the next stage of the Israel-Iran

conflict is a U.S. strike or peace talks", said Tony Sycamore,

analyst at trading platform IG.

Goldman Sachs said on Wednesday that a geopolitical risk

premium of about $10 a barrel is justified, given lower Iranian

supply and risk of wider disruption that could push Brent crude

above $90.

President Trump told reporters on Wednesday that he had yet

to decide whether the U.S. will join Israel in its attacks on

Iran.

As a result of the unpredictability that has long

characterised Trump's foreign policy, "markets remain jittery,

awaiting firmer signals that could influence global oil supply

and regional stability" said Priyanka Sachdeva, analyst at

Phillip Nova.

The risk of major energy disruption will rise if Iran feels

existentially threatened, and U.S. entry into the conflict could

trigger direct attacks on tankers and energy infrastructure,

said RBC Capital analyst Helima Croft.

Iran is the third-largest producer among members of the

Organization of the Petroleum Exporting Countries, extracting

about 3.3 million barrels per day (bpd) of crude oil.

About 18 million to 21 million bpd of oil and oil products

move through the Strait of Hormuz along Iran's southern coast

and there is widespread concern the fighting could disrupt trade

flows.

Separately, the U.S. Federal Reserve kept interest rates steady

on Wednesday but pencilled in two cuts by the end of the year.

Lower interest rates could stimulate the economy, helping to

support demand for oil.

On the supply side, U.S. crude stockpiles fell sharply last

week, registering the largest decline in a year, the Energy

Information Administration said on Wednesday.