Oil prices extended losses for a third consecutive session on Wednesday, with Brent crude falling 2.3% to $79.45 per barrel amid growing market optimism about a potential US-Iran ceasefire agreement. Analysts attribute the downward pressure to reduced geopolitical risk premiums as diplomatic channels show unexpected progress.
According to three commodities traders familiar with the matter, hedge funds have been unwinding long positions since Monday when White House officials signaled openness to indirect negotiations. ‘The market is pricing in a 30-40% probability of sanctions relief on Iranian oil exports within six months,’ said a senior analyst at Energy Aspects who requested anonymity due to client sensitivities.
The price movement comes despite OPEC+ maintaining production cuts and US crude inventories showing a 1.5 million barrel draw last week. Some industry experts caution that the selloff may be overdone. ‘These are still very preliminary discussions,’ noted RBC Capital Markets’ global head of commodity strategy in a research note. ‘The structural supply deficit hasn’t disappeared.’
Forward markets indicate traders expect volatility to remain elevated, with the 30-day implied volatility for Brent options holding near 35%. Any confirmed diplomatic progress could see prices test the $75 support level, while breakdowns in talks may trigger a swift rebound above $85.