WTI Crude Falls Amid Easing Geopolitical Tensions
West Texas Intermediate (WTI) crude oil prices fell by nearly 6% on Monday, hitting a four-day low of around $84.00 after retreating from last week's high near $92.25. The sharp bearish gap at the start of the week was largely due to signs of a pause in US strikes on Iranian targets and potential openings for diplomacy.
The easing of geopolitical tensions reduced the risk premium embedded in crude prices, weighing on WTI. However, supply concerns continued to underpin the market, with shipping disruptions at Bab el-Mandeb and ongoing constraints in the Strait of Hormuz limiting further downside.
Analysts at Rabobank's RaboResearch Global Economics & Markets team noted that crude benchmarks have rallied on renewed supply fears, including Hormuz disruptions, intensified Russia-Ukraine strikes, CPC terminal outages, and record-tight diesel markets. They characterized these simultaneous disruptions as reigniting concerns about the resilience of global oil supply.