Oil Prices Crash! Brent Dips to $65 as Geopolitics Fades

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In the grand bazaar of black gold, prices trembled as though a provincial clerk had dropped his reigns-Brent sliding to $65.98 and WTI to $61.84, a descent of a little more than four percent, while the January fire of fear flickered and died like a candle snuffed by a tired bureaucrat.

The Geopolitical Thaw That Spoiled the Fireworks

On Monday, February 2, the market wore a mask of polite astonishment as the U.S.-Iran drumbeat cooled, and a dollar that seems to have eaten its spinach-nourished by the nomination of Kevin Warsh to the helm of the Federal Reserve-loomed over the scene like a stern father at a church pew. The crude price, which had strutted with the swagger of a warLIKE mood, found itself suddenly short of breath and footmen.

According to a Reuters report, by 6.13 am EST Brent futures stood at $65.98 per barrel, down $3.34, or 4.8%, while WTI fell $3.37, or 5.2%, to $61.84. These declines followed January’s festive gains-Brent up 16% and WTI 13%-as if the market had danced for a fickle queen and now wondered why the hall had emptied.

UBS analyst Giovanni Staunovo noted that the easing of Middle East quarrels and fewer hiccups in U.S. and Kazakhstan supply weighed upon the prices. The President’s Saturday remarks, joined by Tehran’s Ali Larijani’s assurances that negotiations were being arranged, created a bureaucratic sigh that wafted through the trading floor like stale incense.

What kept prices buoyant through much of January were threats of U.S. intervention; now the tentative willingness to bargain has worn down much of the geopolitical risk premium. “The weakness in oil this morning is the combination of disappearing geopolitical risk and the uptick in the dollar,” explained PVM analyst Tamas Varga, as if summarizing a long, tedious tale of two stubbornnesses.

The selloff did not spare the metals either; gold and silver sagged, dragged down by a stronger dollar. “Renewed strength in the U.S. dollar makes dollar‑denominated oil dearer for non‑U.S. buyers, further weighing on prices,” said Priyanka Sachdeva of Phillip Nova, whose crystal ball seems to double as a soapbox in a market square.

Analysts also whisper that oversupply is returning to the stage. OPEC+ confirmed at the weekend that it will keep output unchanged for March, a freeze on planned increases through the first quarter of 2026 due to demand’s seasonal malaise. Capital Economics, a firm that speaks in the language of foreboding yet with a certain civilized gloom, noted that while geopolitical risk has supported prices, the underlying market remains bearish. “The historical example of last year’s 12‑day war between Israel and Iran, and a well‑supplied oil market, will still bear down on Brent crude prices by end‑2026,” they murmur, like a chorus of cautious bureaucrats.

A steady uptick toward $70 per barrel would thicken the trade deficits of major net-importing nations-most notably India, Japan, and the European Union. Beyond the immediate balance-of-trade woes, higher energy costs tend to depreciate currencies against the mighty U.S. dollar, effectively “importing” further inflation-a phrase that sounds almost like a spell from a melancholy almanac.

This inflationary surge presents a double-edged sword: central banks might tilt toward hawkish monetary stances-perhaps lifting interest rates-which could dampen consumer spending and curtail GDP growth, all while the market scribbles its ledger with a flourish of sarcasm.

FAQ 💡

  • Why did oil prices drop over 4%? Easing U.S.-Iran tensions and a stronger dollar pressed crude into a deeper shade of gloom.
  • How far did Brent and WTI fall? Brent to $65.98 and WTI to $61.84 per barrel.
  • What role did OPEC+ play? OPEC+ kept output unchanged, reinforcing concerns of oversupply.
  • How could $70 oil affect economies? It worsens trade deficits, weakens currencies, and fuels inflation.

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2026-02-02 18:57