West Texas Intermediate dropped 3.0 percent to $60.16 per barrel while Brent crude was down 2.93 percent to $64.57, after Trump said he had been told the killings of protesters in Iran had been halted.
In a surprise announcement at the White House, the US president added that he would "watch it and see" about threatened military action.
"They've said the killing has stopped and the executions won't take place -- there were supposed to be a lot of executions today and that the executions won't take place -- and we're going to find out," he said.
Trump had repeatedly talked in recent days about coming to the aid of the Iranian people over a crackdown on protests that rights groups say has left at least 3,428 people dead.
Concern that the situation could restrict supplies of crude had caused oil prices to rise around 1.5 percent on Wednesday.
"Oil prices dropped... on comments from US President Donald Trump that Iran would refrain from any further killing of protesters, watering down fears of a looming supply shock in energy markets," said Kyle Rodda of Capital.com.
Iran makes up three percent of global oil production, analyst Michael Wan of financial group MUFG noted this week.
Wan said Thursday that Trump's latest comments "come even as the United States has redeployed some personnel in Qatar and other American bases from ongoing geopolitical tensions and possible Iranian threats to target those locations".