(Bloomberg) — Oil plunged as geopolitical risk premiums faded after US President Donald Trump said Washington is talking with Iran, while it also got caught up in a broader commodities selloff.
Brent plummeted more than 7% at one point and was trading near $66 a barrel, while West Texas Intermediate was close to $62. 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.
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“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 dropped more than 5% as they continued a retreat that started on Friday, following sharp rallies in the last few weeks. Recent gains in the dollar are also making oil more expensive for many buyers.
Oil had rallied after weeks of escalating tensions that pushed Iran and the US to the brink of conflict, following threats by Trump in January to attack over Tehran’s deadly crackdown on protests. That heightened the risk of disruptions to supply in the region, which provides about a third of the world’s crude, and shifted the focus away from a growing global glut.
Meanwhile, the next trilateral meetings between the US, Russia and Ukraine will be held Feb. 4-5 in Abu Dhabi, Ukrainian President Volodymyr Zelenskiy said. There was little breakthrough in previous talks to end the war — which will soon enter a fifth year and has led to sanctions on Russia’s oil trade.
Elsewhere, OPEC+ ratified plans to keep production steady in March — the last part of a three-month supply freeze — even after the recent surge in prices.
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