WTI Crude Collapses Below $60 as War Premium Evaporates

Global oil markets witnessed a sharp reversal on Thursday, with WTI Crude plunging to trade around $59.23 per barrel, down over 1.6% intraday and extending a rout that saw prices drop nearly 4.6% from recent highs. The sell-off marks the bursting of the “geopolitical risk bubble” that had inflated prices earlier in the week.

Geopolitical De-escalation

The primary driver of the bearish turn is the cooling of tensions between Washington and Tehran. Following diplomatic back-channeling and a more restrained tone from the White House regarding military action against Iran, the fear of an immediate supply disruption in the Strait of Hormuz has dissipated.

Sources indicate that while a US carrier strike group remains in the region, the immediate threat of a direct conflict has receded, prompting traders to liquidate long positions built on war fears.

Bearish Fundamentals Return

With the “war narrative” sidelined, market attention has snapped back to loose fundamentals:

• US Inventories: EIA data revealed a larger-than-expected build in US crude and gasoline stocks, signaling softer domestic demand.
• Global Supply: Market sentiment is being weighed down by reports of Venezuela finalizing a $500 million oil deal to resume exports, alongside the EU lowering the price cap on Russian oil to $44.10, potentially flooding the market with discounted barrels.

Technicals

• Technical analysts warn that WTI is now testing critical support at $58.50. A breach below this level could trigger further technical selling as the market prices in a surplus scenario for 2026.