Brent: Price slide reflects de-escalation hopes – Commerzbank

Commerzbank strategist Charlie Lay, notes Brent Oil tumbled 8.7% to USD 88.36, reversing much of last week’s surge as US–Iran tensions eased and markets priced in de-escalation. Lay stress that shipping through the Strait of Hormuz remains negligible, so the move mainly reflects expectations rather than an actual restoration of global Oil and LNG flows.

Oil drop driven by de-escalation hopes

"The main theme overnight was the sharp decline in oil prices as the pause in US-Iran hostilities extended into a third day."

"Brent crude plunged 8.7% to USD88.36, the largest one-day decline in more than three months, reversing much of last week's 9.9% surge."

"The Strait accounts for around one-fifth of global oil and LNG supplies before the conflict."

"This suggests that the sharp decline in oil prices largely reflects expectations of de-escalation rather than an actual restoration of energy flows."

"The sharp fall in oil prices has eased some of the immediate pressure on the Fed."