Global Markets:
Oil prices plummeted more than 4% on Wednesday following U.S. President Donald Trump’s remarks suggesting ongoing negotiations with Iran, despite Tehran denying any direct talks. The conflicting signals led traders to reassess the geopolitical risks impacting the energy markets.
In detail, international benchmark Brent crude futures fell 4.52% to $98.71 per barrel, while U.S. West Texas Intermediate (WTI) futures declined 3.72% to $88.89 per barrel. The sharp decline was driven by uncertainties surrounding diplomatic efforts amid ongoing tensions in the region.
From the Oval Office, President Trump stated that he had pulled back from an earlier threat to strike Iranian energy infrastructure, citing negotiations as the reason. “They’re talking to us, and they’re talking sense,” Trump remarked when asked about the shift in stance.
Meanwhile, The New York Times reported that the U.S. had sent Iran a 15-point proposal via Pakistan aimed at ending the ongoing conflict. However, officials remain uncertain about the extent of Iranian engagement with the proposal and whether its details are being widely circulated among Iranian authorities. Additionally, questions remain about Israel’s position, as it continues military actions against Iran alongside U.S. efforts.
Iran’s top military spokesperson warned that oil markets will remain volatile until regional stability is achieved under Iranian military control, Reuters reported. This statement underscores the ongoing regional tensions that continue to influence global oil supply concerns.
Goldman Sachs highlighted that the current oil price volatility stems from geopolitical risk premiums rather than fundamental supply-demand shifts. The disruption to oil supplies is considered the largest in decades relative to global supply, creating significant market uncertainty. Goldman’s Daan Struyven noted that near-term price movements are driven by perceived worst-case scenarios, with investors hedging against prolonged disruptions and low inventories.
Goldman projects that flows through the Strait of Hormuz are likely to normalize by April, over a four-week period, but cautions that geopolitical risks remain elevated, keeping markets on edge.
