Quick overview
June opened with a dramatic surge in oil prices, only to see them plunge sharply as geopolitical fears were undercut by signs of de-escalation in the Middle East conflict.
Middle East Tensions Send Oil Prices Soaring—Temporarily
Crude oil markets started June with heightened volatility as geopolitical tensions between Israel and Iran escalated once again. The U.S. initiated targeted strikes in retaliation for Iranian actions, fueling fears of a wider regional conflict and triggering a knee-jerk surge in oil prices.
West Texas Intermediate (WTI) crude spiked to $78.40 shortly after markets opened, driven by concerns over potential disruptions through the Strait of Hormuz—a vital chokepoint that handles roughly 20% of the world’s oil supply.
A $12 Collapse: Market Reverses on Talk of De-escalation
Despite the early surge, WTI crude saw intense selling pressure throughout the day, ultimately plunging by $12 to close near $66.70. The drop underscored how sensitive the oil market remains to war headlines and political rhetoric.
Surprisingly, it wasn’t just the military moves shaping market sentiment—it was the messaging. Former President Donald Trump made remarks that suggested the retaliatory attacks were coordinated and anticipated. According to reports, the U.S. had advance warning of the Iranian strikes, leading traders to view the military actions as symbolic rather than a step toward wider conflict.
No Appetite for War: Traders Reprice Risk
Oil’s sharp reversal was the clearest sign that investors do not expect an extended ground war or a prolonged U.S. intervention in the region. The swift selloff reflected growing consensus that both sides are signaling a desire to avoid full-scale escalation.
With little evidence of meaningful damage and diplomatic signals intensifying, oil traders rushed to reduce exposure, unwinding positions built on fear of prolonged instability.
Outlook: Volatility Likely, But No Panic for Now
While oil could remain volatile in the short term, the market now appears to be pricing in a scenario where diplomacy, rather than conflict, takes center stage. However, any new disruption in the Strait of Hormuz or shift in rhetoric could reignite volatility quickly.
US WTI Crude Oil Live Chart
WTI
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
Related Articles