Oil slides below $100 as easing Hormuz tensions cool global supply fears

Brent crude declined nearly 3.5 per cent to trade around $97.5 a barrel, extending losses after a volatile stretch driven by fears of disruption in the Middle East. Meanwhile, West Texas Intermediate (WTI) crude dropped to nearly $92 per barrel as traders unwound geopolitical risk premiums that had lifted prices sharply in recent weeks.

The decline followed reports suggesting that diplomatic backchannel talks between the United States and Iran were making progress, easing concerns over potential disruptions to shipping routes through the Strait of Hormuz — one of the world’s most critical oil transit chokepoints. Nearly one-fifth of global crude oil trade passes through the narrow waterway every day, making any threat to the route a major concern for energy markets.

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Oil prices had surged above $110 earlier this month after tensions in the region intensified, with investors fearing that any escalation involving Iran could impact tanker movement and tighten global crude supplies.

However, sentiment shifted after indications emerged that both Washington and Tehran may be seeking to avoid a deeper confrontation, helping calm fears across commodity markets.

The easing geopolitical concerns sparked broad selling in crude futures, while global equity markets moved higher on hopes that stabilising energy prices could support economic growth and reduce inflationary pressures.

Market analysts said investors are now reassessing the geopolitical premium that had rapidly built into oil prices during the recent Middle East tensions. Despite the sharp correction, analysts cautioned that volatility is likely to remain elevated, as the regional situation remains sensitive and any fresh developments around Hormuz could quickly reverse market sentiment.

Apart from geopolitics, traders are also monitoring China’s demand outlook, OPEC+ production decisions, and broader global growth trends, all of which continue to shape the direction of oil markets in the near term.