Oil Price Forecast – WTI Drop 5% As WTI And Brent Lose Iran War Premium

Global Oil Shock: WTI CL=F And Brent BZ=F Dump 5–6% As Risk Premium Evaporates

Crude shifted from a five-month high to a hard reset in one session. International benchmark Brent BZ=F has reversed from the ~$69–$70 band to roughly $65–$66, with one print showing $69.73 dropping to $65.64, a slide of about 5.8%. U.S. WTI CL=F rolled from around $65.46 to $61.50, roughly 6% lower, while another snapshot has WTI near $61.92 and Brent at $65.99, both off a little over 5% from last week’s spike. Oilprice boards show the same picture: WTI around $61.93 (-$3.28, -5.03%) and Brent near $66.01 (-$3.31, -4.77%), confirming a broad flush rather than a single-venue anomaly. This is the market taking back the war premium that was added when crude briefly traded near $70 on fears of an Iran-related supply hit.

Geopolitical Repricing: Trump’s Iran Comments Hit CL=F And BZ=F Risk Premium

The trigger is explicit and not narrative: U.S. President Donald Trump stated that Iran is “seriously talking” with Washington on the nuclear track, after days of rhetoric about a “massive armada” heading toward the Persian Gulf. Those negotiations headlines immediately cut the probability the market was assigning to short-term physical disruption from an OPEC producer. Brent had rallied to ~$70 on the escalation language; once the tone shifted toward talks, traders marked down that risk and took profits. You see the result in the straight-line move: Brent back to the mid-$60s, WTI around $61–$62 instead of mid-$60s. This is not a slow macro drift; it is a fast repricing of conflict odds reflected directly into CL=F and BZ=F.

OPEC+ Output Discipline: 1.65 Million bpd Still Parked While Prices Slide

Against this geopolitical swing, OPEC+ did not add bullish fuel. Eight core producers—Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman—reaffirmed that roughly 1.65 million barrels per day of voluntary cuts will stay in place at least through March. They explicitly froze the planned March production increase and tied any future restoration of these barrels to “market conditions.” They also underlined full compliance and compensation for past over-pumping, so on paper there is no fresh supply wave offsetting the price drop. That matters: we now have a 5%–6% selloff in CL=F and BZ=F with OPEC+ still holding significant spare barrels off the market, which tells you this leg down is sentiment and risk-premium driven, not a new oversupply shock.

Refined Products: Heating Oil Futures Confirm The Downside Shock

The move is not confined to crude. U.S. heating oil futures (NY Harbor ULSD) slid nearly 5%, losing 12.6 cents to trade around $2.4075 per gallon, with an intraday range between roughly $2.3917 and $2.4517. Heating oil is the reference for diesel and winter distillates in the U.S.; when that contract falls this hard alongside CL=F, it signals a broad repricing of the entire barrel, not a one-off in futures. Traders are now forced to re-evaluate diesel crack spreads and the winter fuel profile just as U.S. inventory data and fresh cold-weather reports come in. The key point: a 5% drop in heating oil on the same day as a 5%–6% slide in WTI and Brent shows the entire fuel complex is trading off the same de-risking impulse.

Macro Overlay: Stronger Dollar And Cross-Commodity Liquidation Pressure Energy

The oil selloff is dropping into a broader risk reset. Precious metals have been smashed: spot gold fell more than 9% on Friday and traded roughly 2% lower again near $4,770–$4,780 per ounce on Monday, while silver cratered over 31% in one session and continued sliding around $83–$84 per ounce. At the same time the U.S. Dollar Index has stopped falling and bounced about 0.2% on the day, even after a roughly 9% decline across 2025 and another 1.2% drop year-to-date before this move. A firmer dollar mechanically pressures dollar-priced oil for non-U.S. buyers and amplifies the retracement. Analysts are tying the metals shock to the nomination of Kevin Warsh—seen as more hawkish on the Fed’s balance sheet—and the risk that liquidity is withdrawn faster than markets assumed. That same liquidity fear hits leveraged positions across commodities, including CL=F and BZ=F, and helps explain why crude, gold and silver are all being sold together instead of oil acting as a standalone story.

U.S.–Iran And Venezuela: De-Escalation Headlines Versus Longer-Term Supply Geometry

On geopolitics, the tape is giving you two parallel signals. First, the Iran channel: talk of “serious” negotiations and an “acceptable” deal being possible removes the immediate tail-risk of a near-term strike on an OPEC producer. That is why Brent gave up the move from $65 to $70 and settled back near $65–$66. Second, there is a gradual easing of sanctions pressure on Venezuela, with the U.S. relaxing some restrictions and majors like Chevron already operating under licenses. Markets also watch India and other buyers shifting crude sourcing between Iran, Venezuela and other suppliers as policy flexes. The combination is simple: less probability of a Persian Gulf supply shock and more potential capacity from previously constrained barrels. In that context, a five-dollar slide in BZ=F and a three-dollar-plus hit in CL=F is the market forcing the geopolitical premium to reprice closer to actual physical risk rather than worst-case scenarios.

*Positioning Reset: Profit-Taking, Risk Premium Unwind And Sentiment Shift In CL=F

The fact that oil pulled back immediately after touching a five-month high is not coincidence. Positioning was skewed long following January’s rally, which was built on U.S.–Iran escalation fears, Arctic cold disrupting U.S. supply, and OPEC+ discipline. Once the catalyst flipped—from “massive armada” to “seriously talking”—those longs had every reason to take money off the table. That explains why CL=F slid from about $65.46 to $61.50 in one Anadolu snapshot and why Oilprice boards show a simultaneous $3.28 intraday drop to around $61.93. This is classic risk-premium bleed: longs exit as the tail risk is repriced lower, systematic funds respond to momentum, and the price overshoots to the downside until new buyers step in. The key is that the underlying OPEC+ supply policy did not change; what changed was the probability market participants assign to disruptive war headlines in the Gulf.

Data Watch: API, EIA Weekly Report And EIA STEO As Near-Term Catalysts For CL=F And BZ=F

With the geopolitical shock mostly absorbed, short-term direction in CL=F and BZ=F will track the data calendar. The American Petroleum Institute (API) publishes its weekly statistical bulletin on Tuesday afternoon, often acting as a preview for U.S. government numbers. The Energy Information Administration (EIA) then releases the Weekly Petroleum Status Report—in this case scheduled for February 4, 2026 at 10:30 a.m. Eastern—with detailed data on crude inventories, refinery runs, imports and product stocks. A few days later, on February 10, the EIA’s Short-Term Energy Outlook (STEO) will update its projections for global oil demand, U.S. production and price assumptions. If API/EIA show large crude builds alongside steady or rising runs, the market will read that as confirmation that supply is more than adequate into late winter, adding pressure on WTI and Brent. If instead you see surprise draws in crude or distillates during a cold spell, some of the current pessimism can reverse quickly. Right now, energy traders are effectively waiting for these data points before deciding whether the $60–$62 zone in CL=F is a floor or just a stepping stone lower.

Broader Energy Complex: OPEC+ Pause, U.S. Rigs Flat And LNG/NatGas Adding Bearish Color

Beyond crude and distillates, other parts of the energy complex are also broadcasting softness. Natural gas futures around $3.44, down roughly 21% on the day in one snapshot, signal that the market is repricing winter demand risk lower as forecasts moderate. OPEC+ has extended its output pause into March despite concerns about a budding glut, which means producers are not rushing to tighten the market further even as BZ=F loses the $70 handle. U.S. oil rig counts are flat week-on-week but still down 68 rigs versus a year earlier, reinforcing a medium-term cap on U.S. supply growth while not reacting moment-by-moment to this price drop. Meanwhile, LNG flows, European demand and Chinese import behavior will decide whether the current pullback stays a crude-only story or broadens into a more persistent energy downturn. For now, the coordinated 5% hit across WTI, Brent, gasoline (about -4.56%) and heating oil means the entire barrel is being repriced, not only a single contract.

Investor Playbook: How To Read A 5% Oil Flush In A Politically Charged Tape

From a trading standpoint, this 5%–6% air-pocket in CL=F and BZ=F is best read as a risk-premium unwind rather than a confirmation of structural oversupply. The numbers are clear: Brent has travelled from roughly $65 to $70 on escalation headlines and then back to $65–$66 on de-escalation talk; WTI moved from around $62 to mid-$60s and then back to the low $61–$62 range. At the same time OPEC+ is still holding 1.65 million bpd offline and has not signalled an imminent flood of crude, while U.S. rigs remain well below last year. What has changed is the perceived path of U.S.–Iran relations and the broader liquidity outlook via the Fed and the dollar. Short-term, that argues for elevated volatility and wider intraday ranges rather than a calm grind. For directional traders, the key tactical levels are the recent highs near $70 Brent / mid-$60s WTI on the upside and the low-$60s in WTI plus low-to-mid-$60s in Brent as immediate support, with deeper stress testing around the high-$50s if data and geopolitics both turn negative.

Oil Price Verdict – CL=F And BZ=F: Short-Term Bearish Bias, Medium-Term Tactical Hold

Putting all the numbers together, the current move in WTI CL=F and Brent BZ=F is a clean 5%–6% downshift driven by de-escalation headlines, a firmer dollar, and a cross-asset de-risking that also crushed gold and silver. OPEC+ is still withholding 1.65 million bpd, U.S. rigs are 68 below last year, but near-term demand is seasonally soft and geopolitical fear has been sharply discounted. That combination points to a bearish short-term skew—especially if API/EIA reports confirm comfortable stocks—but not yet to a thesis that the cycle has decisively flipped into a deep, structural bear market. On that basis, the stance on oil here is tactical Hold with a bearish trading bias: respect downside risk in the $60–$62 WTI and mid-$60s Brent zone over the next days and weeks, but recognise that any renewed Iran tension, surprise inventory draws, or OPEC+ policy shift can quickly re-inflate part of the risk premium that has just been erased.

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