Oil prices plummeted sharply as the market began to shed the "war premium" that had been attached throughout January. The trigger: Donald Trump said Washington was communicating/talking with Iran, leading market participants to interpret the situation as a signal of de-escalation, not a move towards open conflict.

On Monday, February 2, 2026, Brent fell to around $65.86/barrel and WTI fell to around $61.79/barrel both correcting around 4–5% after previously posting large monthly spikes. The market, which had priced in supply disruptions yesterday, is now rushing to "reset."

From a geopolitical perspective, Trump also downplayed the threat of a "regional war" from Ali Khamenei. At the same time, there is a diplomatic push: reports indicate White House envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi will meet in Istanbul on Friday.

According to Haris Khurshid of Karobaar Capital LP, this decline is more like a repositioning than a major fundamental shift as no real new supply shock has occurred.

Pressure is also coming from broader commodity selling. As precious metals and other commodities are swept away by profit-taking, oil is being pulled down along with it especially as a stronger dollar makes USD denominated commodities relatively more expensive for non dollar buyers.

Going forward, the market will be watching for two main "triggers": (1) whether any new headlines re escalate the Iran-US tensions, and (2) whether certain price levels trigger further selling from trend-following traders/CTAs. If tensions remain subdued, oil could potentially continue consolidating as the big story in 2026 remains the relatively loose supply in the first half of the year. (alg)[sma]

Source : Newsmaker.id