Global oil prices fell on the day, with West Texas Intermediate approaching the psychologically important $90-a-barrel level and Brent crude easing towards the mid-$90s after briefly trading above $100 overnight.
The pullback came as broader financial markets shifted back into risk-on mode.
Equities advanced across major markets, bond yields declined and crude prices gave up part of the sharp risk premium that had built during the previous session.
Oil was down by about $5 a barrel on the day, as investors assessed reports around US-Iran talks and their potential implications for the Strait of Hormuz, one of the world’s most important energy shipping routes.
The decline does not remove geopolitical risk from the market.
However, it suggests traders are reassessing the immediate threat to supply flows after an overnight surge that briefly pushed Brent above $100 a barrel.
Oil retreats from overnight spike
Crude benchmarks had jumped overnight as investors reacted to heightened Middle East tensions and the potential for disruption to energy supplies.
Brent’s brief move above $100 a barrel reflected concern that conflict in the region could threaten shipping flows or reduce available supply.
WTI also climbed before easing back towards $90 a barrel during the following session.
The global oil benchmarks were trading down towards critical thresholds.
WTI’s approach to $90 is important because round-number levels often act as psychological markers for traders, particularly during volatile periods.
Brent’s retreat towards the mid-$90s also points to a partial unwind of the previous session’s risk premium.
The move suggests that while traders remain alert to geopolitical headlines, the market is not yet pricing in a sustained supply shock.
Risk appetite returns across markets
The decline in oil coincided with a broader improvement in market sentiment.
Scotiabank described the tone across markets as broadly bullish, with equities rising and government bond yields falling in major economies.
US equity index futures moved to fresh highs, while energy shares traded higher alongside the broader market even as crude prices weakened.
That combination points to a market that is looking beyond the immediate shock of higher energy prices.
Lower oil prices can support risk appetite because they reduce inflation concerns and ease pressure on consumers and companies.
Bond yields also declined, with the 10-year US Treasury yield falling to 3.728%.
Lower yields can support equity valuations and strengthen the risk-on mood, especially when investors believe inflationary pressures from energy may be contained.
The shift in sentiment marked a reversal from the previous day’s risk-off tone, when higher oil prices and Middle East tensions weighed on markets.
Strait of Hormuz reports in focus
Reports around US-Iran talks were a key focus for energy traders.
The details of the negotiations remained limited, but available reporting appeared to focus on the possible reopening of the Strait of Hormuz rather than more difficult issues such as uranium enrichment.
The Strait of Hormuz is critical for global energy flows because large volumes of crude and liquefied natural gas pass through the waterway.
Any disruption there can quickly affect oil prices, shipping costs and inflation expectations.
For that reason, even partial signs of progress on shipping access can influence crude markets.
If traders believe the immediate risk of disruption is lower, some of the geopolitical premium in oil prices can fade.
However, the analysts cautioned that the effect may be short-lived if the more complex issues between the US and Iran remain unresolved.
Geopolitical risk has not disappeared
The pullback in crude should not be read as a full easing of geopolitical risk.
The issues surrounding Iran remain difficult, and any renewed escalation could quickly lift oil prices again.
Markets are especially sensitive to headlines involving energy infrastructure, shipping routes and any threat to supply from the Gulf.
For now, the market appears to be distinguishing between short-term logistical discussions around the Strait of Hormuz and deeper political disputes that may take longer to resolve.
That distinction matters for crude prices.
A reopening or stabilisation of shipping routes could pressure oil lower in the near term, while unresolved nuclear and security questions may keep a risk premium in the market.
What traders are watching next
The immediate levels are clear. WTI is testing the $90-a-barrel area, while Brent is holding in the mid-$90s after failing to sustain its move above $100.
If oil continues to fall, it could reinforce the risk-on tone across equities and ease pressure on bond markets.
A renewed rise in crude, however, would likely revive inflation concerns and weigh on sentiment.
Traders will also watch for more detail from US-Iran discussions, especially any confirmation around the Strait of Hormuz and whether shipping flows can normalise.
For now, crude has stepped back from its overnight highs.
The move reflects a market that remains alert to Middle East risk but is no longer pricing the most severe near-term supply scenario.
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