Oil & Gas

BUSINESS

Oil prices retreated sharply as traders unwound risk premiums that had built up over recent days, erasing much of the gains seen earlier in the week. Brent crude fell to around the mid-$60s per barrel, and West Texas Intermediate (WTI) dropped toward the low-$60s  both down about 3% on the session. The downturn followed Trump’s remarks that killings in Iran were slowing and that there were no imminent plans for major military action, reducing the premium traders had placed on potential supply shocks from one of OPEC’s largest producers. Higher-than-expected U.S. crude and gasoline stock builds also weighed on markets, adding to selling pressure after geopolitical fears eased.

ECONOMIC

The slide in crude comes amid signs of a continuing supply overhang and mixed market fundamentals. U.S. Energy Information Administration data showed inventories climbing by more than analysts anticipated, reinforcing expectations of ample global supply. Resuming Venezuelan oil production and exports has further eased tightness in certain segments of the market, counterbalancing earlier concerns about disruptions in the Middle East. China’s continued strong import demand has supported crude flows, but overall oversupply expectations for 2026 highlighted by some major analysts continue to cap price upside despite bouts of geopolitical volatility.

GEOPOLITICAL

Politically, Trump’s comments had an immediate impact by reducing fears of a U.S.Iran military escalation that had previously lifted risk premiums on oil. Markets interpreted the remarks as signalling a lower chance of imminent conflict, prompting a rapid reassessment of risk and a sharp repricing of crude futures. While unrest in Iran and broader instability in the Middle East still pose potential long-term risks to energy flows, the easing of immediate military fears helped pull oil prices lower. The rapid shift underscores how sensitive energy markets remain to political developments in major producing regions, even as longer-term concerns about supplies and global demand dynamics weigh on price direction.