Crude Prices Plunge as Geopolitical Risk Premium Vanishes

Raw oil was closed in August (CLQ25) on Tuesday to the bottom -4.14 (-6.04 %), and the RBob gasoline (RBQ25) closed the bottom -0.1282 (-5.83 %).

Crude and gasoline oil was sharply sold on Tuesday to 1-1/2 weeks after president Trump announced the ceasefire in the Israeli-Iran conflict, which reduces concerns about disrupting crude supplies in the Middle East and removing some geopolitical risks that were built in crude prices. Crude oil losses accelerated on Tuesday after President Trump said that China could continue to buy Iranian oil, which strengthens speculation that the United States may soon reduce some sanctions on Iranian crude exports.

On the positive side of crude was a segment on Tuesday at the DOXY00 index to the lowest level in one week. Also, on Tuesday in S&P 500, a 4 -month -old confidence in the economic view was shown and was supporting energy demand.

Anxiety about global oil abundance is negative for raw prices. On May 31, OPEC+ agreed to raise crude production 411,000 barrels in July after the production of the same amount for June. The Kingdom of Saudi Arabia has indicated that the additional increases in raw production may be followed, which are seen as a strategy to reduce oil prices and punish OPEC+ members, such as Kazakhstan and Iraq. Opec+ output to reflect two -year production reduction, which gradually restores a total of 2.2 million barrels per day. OPEC + had previously planned to recover production between January and late 2025, but anymore the reduction of production will not be fully regained until September 2026. OPEC production in May Skud +200,000 BPD has risen to 27.54 million barrels per day.

Gasoline prices provide support from the dropping of the American Automobile Association (AAA) that the record number is 61.6 million people who will travel by car on July 4 (June 28 to July 6), an increase of 2.2 % over last year and a sign of the strongest demand for gasoline.

Oil prices are still undermining it due to the tariff fears, as President Trump recently stated that he intends to send messages to dozens of American trading partners within a week to two weeks, which puts a customs tariff unilaterally before the final date on July 9, which followed his stop for 90 days.

A decrease in crude oil that was held all over the world on tank tankers is up to oil prices. Vortexa reported on Monday that crude oil stored on carriers was fixed for at least seven days, decreased by -13 % w/W to 79.66 million barrels per week ending June 20.