Lagos — The price of U.S. crude oil, West Texas Intermediate (WTI), fell by 3.5% since last Thursday, reaching the $61.75 per barrel zone. This decline comes after a bullish streak that saw WTI rise by more than 7.10% since April 15, 2025. The correction in price reflects a combination of geopolitical, economic, and seasonal factors influencing the energy market’s behavior.
One of the main drivers behind this drop is the recent progress in diplomatic talks between the United States and Iran. The possibility of a deal that would allow Iranian oil exports to resume has triggered bearish expectations among investors, who anticipate an increase in global crude oil supply. If Iran fully rejoins the international market, millions of barrels per day could be added to global supply, putting downward pressure on prices.
This context coincides with reduced liquidity in the markets due to holidays in various regions, contributing to greater volatility in crude oil prices. In less liquid markets, even moderate moves can lead to significant price swings, exacerbating rallies and declines.
Alongside geopolitical uncertainty, the economic outlook in the United States is also influencing crude prices. Recent data on growth and employment have shown mixed signals, raising doubts about the strength of the economic recovery. This uncertainty may temper expectations for energy demand, especially if there is a perceived slowdown in industrial and transportation consumption.
In addition, investors are closely watching the Federal Reserve’s decisions, as any adjustment to interest rates could significantly impact commodity markets. A more restrictive monetary policy would strengthen the dollar, negatively affecting crude prices by making it more expensive for international buyers.
Finally, the drop in WTI can also be seen as a technical correction following the strong rally in previous weeks. Markets often react to key resistance and support levels, and a pullback after a sharp rise is not unusual, especially when combined with fundamental factors that encourage traders to take profit.
In conclusion, the recent drop in WTI reflects a complex geopolitical, technical, and economic interaction. Iran’s potential return to the oil market, combined with low liquidity and U.S. macroeconomic uncertainty, has created a highly volatile environment. As diplomatic negotiations progress and economic data become clearer, the energy markets may find a new balance. In the meantime, investors should be prepared for abrupt moves and continue cautiously assessing the global outlook.”
*Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS
