Key Moments
- Brent crude has fallen -8.6% since Friday, erasing more than half of its prior +13% two-week rally.
- Deutsche Bank flags that Brent is on track for its largest weekly decline since June, alongside weakness in European natural gas.
- Lower energy prices are described as providing a supportive backdrop for global bond and equity markets.
Energy Markets Under Pressure
Deutsche Bank’s Early Morning Reid team, including Peter Sidorov and Jim Reid, reports that Brent Oil has surrendered more than half of a recent +13% advance as oil prices react to signs of easing geopolitical risk in the Middle East. The team notes that this downturn positions Brent for what could be its steepest weekly slide since June, with European natural gas prices also moving lower and the broader environment turning more favorable for global bonds and equities.
Middle East Developments Shift Risk Sentiment
The report attributes the latest leg lower in oil primarily to a series of headlines pointing to potential de-escalation in tensions involving Iran.
“Markets turned more positive over the past 24 hours amid a flurry of more encouraging, if non-definitive, headlines on Iran, including a report that the US and Iran may announce a ceasefire in the coming days. This has left oil prices likely on course for their biggest weekly decline since June, with Brent crude down -8.6% since Friday as I type.”
“In terms of yesterday’s market moves, Middle East developments were the key driver, as several headlines raised hopes for de-escalation. These included a couple of reports suggesting that the US administration does not expect renewed full-scale conflict with Iran.”
“The New York Times reported that the US was preparing to send US diplomats back to the Middle East, while later in the day Axios reported that Secretary of State Rubio told allies that the US is not looking to initiate new strikes against Iran.”
“Meanwhile, we heard that Iran and Oman discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz, with the initiative seeking to establish a “temporary joint maritime corridor” and to jointly work on clearing the strait of mines.”
“And then, near the US close, Russia’s RIA Novosti reported, citing Iranian and Pakistani sources, that the US and Iran agreed a new ceasefire which is expected to be announced in the coming days and would include freedom of shipping via Hormuz.”
Price Action in Brent Crude
The combination of these reports has driven a pronounced pullback in Brent futures.
“This amalgamation of stories pushed oil prices lower. Brent settled -3.89% lower yesterday and is trading another -2.60% lower at just over $86/bbl this morning, extending its decline following the RIA Novosti report. With a -8.6% decline so far this week as I type, Brent has reversed more than half of its +13% rise over the previous two weeks.”
Brent Performance Snapshot
| Metric | Move | Context |
|---|---|---|
| Prior rally | +13% | Increase over the previous two weeks |
| Week-to-date change | -8.6% | Decline since Friday, as cited in the report |
| Previous day’s settlement move | -3.89% | Daily drop into the last close |
| Morning trading move | -2.60% | Additional slide to just over $86/bbl |
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