Oil fell sharply as geopolitical risk premiums faded after US President Donald Trump said Washington is talking with Iran, while a broader commodities selloff exacerbated the slide.
West Texas Intermediate plummeted 4.7% to settle near $62 a barrel, the biggest loss since June, while Brent futures also nosedived. Trump downplayed Iran supreme leader Ayatollah Ali Khamenei’s threats of a regional war over the weekend, reiterating he’s hopeful they’ll make a deal.
The Islamic Republic’s foreign ministry said it hopes diplomatic efforts will avert a war. White House envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi are set to meet in Istanbul on Friday, Axios reported, citing two people familiar with the matter.
“The move lower looks more like a positioning reset than a fundamental shift,” said Haris Khurshid, chief investment officer at Karobaar Capital LP. “With no new supply shock, oil is giving back some risk premium as the market recalibrates after pricing in near-term disruption that just didn’t materialize.”
Crude was also hit as commodities — particularly metals — came under intense selling pressure. Gold fell as much as 10%, and copper at one point dropped more than 5% as they continued a retreat that started on Friday.
The precipitous drop comes on the back of WTI’s biggest monthly increase since 2023, supported by broad-based flows into commodities during the same period. The prospect of conflict with Iran and pockets of supply disruption led to a surprisingly tight first month of the year. Still, the wider backdrop is one of elevated supplies, particularly in the first half of 2026.
At current prices, the sharp reversal will trigger selling from trend-following commodity trading advisors, according to James Taylor, head of the quant service at consultant Energy Aspects. More selling would come if Brent falls below $65 a barrel, he added, noting that large levels of options open interest could also exacerbate price swings.
Rapid shifts in financial flows have amplified the moves in oil prices so far this year. Traders began the year with bumper short positions that have quickly reversed after weeks of geopolitical tumult.
Elsewhere, the US and India reached a trade agreement cutting tariffs on Indian goods after Prime Minister Narendra Modi agreed during a phone call to stop buying Russian oil. Shipments of Moscow’s crude to Indian ports have tumbled toward the lowest in more than three years, contributing to a growing pool of unsold sanctioned barrels across the globe.
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