Global crude oil markets are heading for their sharpest quarterly decline since the COVID-19 pandemic, as easing geopolitical tensions in the Middle East trigger a broad sell-off and erase much of the risk premium that had supported prices, according to a report by OilPrice.com.
Brent crude is on course to record a decline of more than 30% during the second quarter, marking its biggest quarterly slump since the first quarter of 2020 when pandemic lockdowns sent global fuel demand into freefall.
OilPrice.com, citing ICE exchange data compiled by Bloomberg, said Brent prices have also fallen by roughly 20% in June alone.
The latest downturn follows a memorandum of understanding signed by the United States and Iran in mid-June to continue negotiations toward a broader peace agreement by August.
The diplomatic breakthrough has eased fears of prolonged supply disruptions, encouraging traders to unwind positions built around geopolitical risk.
Both Brent and West Texas Intermediate (WTI) crude have now retreated to levels seen before the outbreak of hostilities involving Iran earlier this year, reflecting growing confidence that crude exports through the Strait of Hormuz will continue to normalize as tanker traffic gradually resumes.
The rapid decline in oil prices has prompted several major investment banks to lower their price forecasts, betting that improving regional stability will support uninterrupted energy flows. However, analysts caution that financial markets may be underestimating the possibility of renewed disruptions if tensions flare up again.
Warren Patterson, Head of Commodities Strategy at ING, said current market pricing suggests investors are treating the temporary ceasefire between the United States and Iran as though it were a permanent resolution.
He noted that with crude trading around $70 per barrel, markets are assigning little to no geopolitical risk premium despite ongoing uncertainty in the region.
The sharp correction underscores how quickly global energy markets can reverse course as geopolitical developments reshape expectations for supply, shipping and global economic growth.
It was first published by OilPrice.com.
