Oil prices dropped sharply on Monday as easing geopolitical tensions between the United States and Iran encouraged traders to take profits following last week’s strong rally.
At 08:20 ET (13:20 GMT), Brent crude futures for April fell 5.1% to $65.82 per barrel, while U.S. West Texas Intermediate (WTI) declined 5.2% to $61.76 per barrel.
Crude prices had climbed close to six-month highs last week, driven by fears of potential U.S. military action against Iran and supply disruptions caused by extreme cold weather across North America. Both Brent and WTI recorded their largest monthly gains since 2022 during January.
Over the weekend, U.S. President Donald Trump stated that Iran was “seriously talking” with Washington, comments that followed Iranian officials confirming plans to arrange negotiations with the United States. These remarks marked a shift from recent rhetoric, after Trump had repeatedly warned of possible military action over Iran’s nuclear program and internal unrest, while also deploying additional naval forces to the Middle East.
Those developments had previously fueled concerns about renewed U.S. strikes on Iran, raising fears of further instability in the Middle East and potential disruptions to oil production. As a result, crude prices had surged as markets priced in a higher geopolitical risk premium.
According to analysts at ING, the latest selloff reflects renewed optimism around U.S.–Iran negotiations, which has reduced geopolitical risk. They added that a broader correction across global financial markets has further accelerated the decline in oil prices.
Earlier gains in crude had also been supported by weather-related supply disruptions in the United States, which temporarily overshadowed concerns about weak global demand and the risk of a supply surplus in 2026. In addition, a major production outage in Kazakhstan had helped underpin prices.
However, those supportive factors were outweighed on Monday by profit-taking and a rebound in the U.S. dollar. The greenback strengthened from recent four-year lows after President Trump nominated Kevin Warsh as the next chairman of the Federal Reserve, putting additional pressure on dollar-denominated commodities such as oil.
OPEC+ keeps production steady
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, confirmed on Sunday that it would keep oil production unchanged for March. The decision reinforced the group’s earlier move to pause further output increases, despite the recent rise in crude prices.
OPEC+ has already increased production by approximately 2.9 million barrels per day through 2025, but announced in November that any additional hikes would be postponed indefinitely. The group offered no forward guidance on future output levels, reflecting ongoing uncertainty surrounding the global economy and geopolitical developments.
Speculative positioning increased before the drop
Data on speculative positioning showed that heightened geopolitical tensions had encouraged fresh buying ahead of the latest decline. Money managers increased net long positions in ICE Brent by nearly 30,000 lots last week, marking the strongest bullish stance since September 2025. Net long positions in NYMEX WTI also rose for an eighth consecutive week, reaching their highest level since August 2025, partly supported by extreme cold weather that disrupted refinery operations along the U.S. Gulf Coast.
