Brent Drops Sharply After Positions Closed on Expired Contract
Brent oil prices weakened after briefly touching a four-year high, with the benchmark June contract falling more than 3% to below US$114 per barrel after previously exceeding US$126. The movement occurred as trading volume thinned ahead of the contract's expiry, increasing intraday volatility.
Several market participants assessed that the selling pressure was partly related to position adjustments ahead of expiry, including a shift in interest to the lower-trading July contract. The July contract fell around 1.8% to US$108.45 per barrel, accentuating the price differential between contracts amid rollover activity.
On the fundamental side, the previous increase was driven by a supply risk premium after the closure of the Strait of Hormuz drove up energy prices. However, several major oil traders warned that supply shocks could reverse the pressure on demand, especially if high energy prices erode economic activity.
Geopolitical sentiment remained volatile after an Axios report indicated that the head of US Central Command, Admiral Brad Cooper, was scheduled to brief US President Donald Trump on military options, including plans for short, intense strikes against infrastructure targets. Iran continues to maintain a defiant stance, adding to the uncertainty surrounding the escalation.
For the market, this dynamic keeps oil in a "headline-driven" regime with two competing narratives: the risk of supply disruptions that amplify inflationary pressures, versus the risk of an economic slowdown that limits demand resilience. The focus will now be on developments in shipping access in the Strait of Hormuz, signals about US policy regarding the coalition securing sea lanes, and indications of weakening demand from key regional activity data. (gn)*
Source: Newsmaker.id
