Crude oil posts its sharpest drop in years as the market rapidly prices out war-risk premium after the Hormuz deal
๐ Oil fell sharply after the US and Iran reached a temporary two-week ceasefire, pulling Brent back to the $94โ96/barrel area and WTI to around $94โ96. It was one of the steepest daily declines since 2020, showing how quickly the market removed part of the geopolitical risk premium.
๐ The main focus remains the Strait of Hormuz, which handles roughly 20% of global oil flows. As the threat of a major supply disruption eased, defensive buying faded just as fast, triggering a broad and aggressive selloff.
โ ๏ธ Even so, the current move is not enough to say the risk is gone. Vessel traffic through Hormuz is still limited, regional energy infrastructure remains damaged, and accusations of ceasefire violations are still surfacing, meaning price swings could stay elevated in the next few sessions.
๐ข๏ธ The key point is that oil, despite the sharp drop, is still trading well above pre-war levels. That suggests the market has only removed part of the short-term premium, while a meaningful layer of geopolitical uncertainty is still embedded in prices.