BNY’s Head of Markets Macro Strategy Bob Savage highlights a sharp pullback in Brent and WTI as markets price a possible end to the Iran conflict within weeks, even as the Strait of Hormuz remains effectively closed. Inventory data show a surprise U.S. crude build and still‑elevated production, while the bank stresses that upcoming EIA figures will be key for confirming supply and output trends.

Geopolitics and inventories drive crude

"Oil prices have fallen sharply, with Brent crude dropping below $100 and WTI near $97, as markets reacted to signals from President Trump that the Iran conflict could end within two to three weeks."

"The 5.4% drop in oil prices from $100/barrel Brent is significant; however, stalling price action in the EU after Iran denied that talks are underway or that the Strait of Hormuz is about to be reopened sent prices higher again. The correlation to USD or stocks is softening a bit, as “cautious optimism” serving as more of a driver than the current conflict."

"While traders are pricing in potential de-escalation, risks remain elevated given the damage to energy infrastructure and continued military deployments in the region. Uncertainty remains over negotiations with Iran and the timeline for restoring supply flows, leaving markets sensitive to further geopolitical developments."

"The U.S. API weekly inventory report revealed a significant surprise 10.263 million barrel (mb) crude oil build, when a 1.3mb draw was expected. The SPR was drawn down by just 0.300mb last week: U.S. production fell to 13.657mb, but that is still 0.83mb/day more than in 2025."

"Gasoline inventories fell by 3.2mb but are 3% above average, while distillates fell by 1.04mb, staying 0.4% below their five-year average. Watch the EIA report to confirm oil supplies and U.S. production."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)