Oil Rout: Crude Plunges 3% as Geopolitical Risk Premium Evaporates

Global crude benchmarks suffered a violent correction during the Asian and European sessions on Thursday, shedding over 3% as the geopolitical fear trade unraveled. WTI Crude plummeted to $59.83, while Brent slid to $64.19, driven by signals that the immediate threat of a direct US-Iran military confrontation has receded.

The Geopolitical U-Turn

The sharp reversal was triggered by comments from the US administration suggesting that Iranian internal crackdowns have eased. Early in the week, prices were buoyed by fears of supply disruptions in the Strait of Hormuz—a crucial artery for 30% of the world's oil. However, President Trumps latest signaling effectively removed the “War Premium” that had been keeping prices elevated.

Fundamentals Bite Back: The Supply Glut

As the fog of war lifts, bearish fundamentals return. Last weeks US crude inventories exceeded expectations. Furthermore, the US has completed its first sale of Venezuelan crude. Even a marginal increase exacerbates the projected 1-2 million barrel per day (bpd) global surplus expected by 2026.

Market Snapshot

• WTI Spot Price: $59.83
• Brent Spot Price: $64.19
• Projected Surplus (2026): 1-2 million bpd

Technicals

• WTI failed at box resistance.
• Next critical support testing the $58.43 level.