Deutsche Bank strategists highlight sharp two-way moves in Brent Oil as conflicting signals emerge on potential US–Iran talks. Brent dropped back below $100 to ease inflation fears before rebounding above $103 as Iran denied negotiations and regional escalation risks resurfaced. The authors stress that oil remains below earlier highs but sentiment is fragile.

Oil whipsaws on shifting war narrative

"The trajectory of this newsflow was taken positively, with the prospect of talks leading to a huge slump in oil prices. So Brent crude fell from $113/bbl right before Trump’s post to close at $99.94/bbl. It was a similar story for WTI as well, which fell from around $99/bbl immediately beforehand to just $88.13/bbl by the close."

"For markets, the fact that the two sides might be talking was taken as a huge positive, because it opened up the tail outcome of a much quicker end to the conflict than previously supposed. So by the close, Brent crude oil prices (-10.92%) were back down to $99.94/bbl, which significantly eased fears about the scale of any inflation shock."

"Obviously much now depends on the progress of any talks, and whether the more optimistic rhetoric is followed up by concrete action. Indeed, Iranian officials have repeatedly denied that talks with the US were even happening, which had contributed to markets reversing some of the initial risk-on reaction late yesterday and overnight. Brent crude has edged back up nearly 4 percent to $103.88/bbl this morning, with futures on the S&P 500 (-0.69%) and STOXX 50 (-0.84%) notably lower."

"We're still comfortably below the highs from yesterday morning and that pullback in oil prices was treated with a huge sigh of relief, as it significantly eased fears about a stagflationary shock, and also pushed back against the prospect of imminent rate hikes."

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