Oil prices fell from months-long highs as US-Iran tensions eased
Oil prices plummeted nearly 5% on Monday, heading for their sharpest single-session drop in more than six months, after Washington signaled it was holding talks with Iran and de-escalating tensions with the significant OPEC member. Analysts say geopolitical risks are masking the downward trend in the oil market.
Brent crude futures fell $3.30, or 4.8%, to $66.02 a barrel at 05:28 GMT. WTI crude also dropped $3.23, or about 5%, to $61.98 a barrel.
Both contracts are showing a sharp decline from months-long highs as the risk of military strikes eased following Trump’s weekend remarks.
Trump’s repeated threats of intervention against Iran if it did not accept the nuclear deal, or continue killing protesters, had supported oil prices throughout January.
The recent pullback has also been supported by a renewed strengthening of the US dollar, making dollar-denominated oil more expensive for buyers outside the US, further putting pressure on prices.
The crude oil market is interpreting this as an encouraging step back from the conflict, mitigating the geopolitical risk premium reflected in the price during last week's rally and triggering a wave of profit-taking. Geopolitical risks are masking an underlying, downward-trending oil market.
At a meeting on Sunday, OPEC+ agreed to leave March oil production unchanged. In November, the group had frozen further increases planned for January-March 2026 due to seasonally weaker consumption.
An oil market with ample supply will continue to put pressure on Brent crude oil prices until the end of 2026.
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