Oil Price Falls Over 5%
Global oil prices fell sharply at the start of the week, with Brent crude sliding more than 5 per cent to trade below $66 a barrel, as markets reacted to signs of easing geopolitical tensions between the United States and Iran, alongside confirmation that OPEC+ will maintain its current production levels. The pullback reversed a portion of the gains recorded earlier in January, when fears of supply disruptions had pushed prices to multi-month highs.
Brent crude futures declined on Monday, February 2, 2026, as investors reassessed geopolitical risks in the Middle East, a region that plays a critical role in global energy supply. The easing of tensions reduced the likelihood of near-term disruptions to oil shipments, prompting traders to unwind positions built during the earlier period of heightened uncertainty.
The price decline follows reports over the weekend indicating progress in diplomatic engagements between Washington and Tehran. Both sides reportedly signaled that discussions were moving forward, marking a notable shift from the confrontational tone that dominated much of the previous month. In January, escalating rhetoric, military warnings and threats of retaliation had heightened concerns about potential conflict, driving oil prices higher on fears that supply routes could be affected.
Market sentiment was further supported by reports that Iran’s Revolutionary Guards’ naval forces do not intend to conduct live-fire exercises in the Strait of Hormuz, one of the world’s most strategic oil transit corridors. The Strait of Hormuz handles roughly a fifth of global oil shipments, and any disruption in the area typically triggers sharp price spikes. The absence of planned military exercises eased concerns that shipping lanes could be threatened in the near term.
At the same time, attention remained on the supply outlook from major oil producers. On Sunday, OPEC+ reaffirmed its decision to keep production unchanged in March, the final month of its three-month supply freeze. The group’s decision signals continued caution, as producers balance efforts to support prices against concerns about global demand growth.
Analysts noted that the combination of reduced geopolitical risk and steady supply management created a volatile trading environment. With prices having risen strongly earlier in the year, many investors opted to take profits as risk premiums faded. This contributed to the sharp pullback in Brent prices, even as underlying supply discipline remains in place.
Despite the decline, analysts cautioned that oil markets remain sensitive to sudden shifts in geopolitical developments, production policy and demand conditions. While easing US–Iran tensions have lowered immediate supply disruption fears, uncertainty persists around global economic growth, energy demand trends and future OPEC+ decisions.
Brent crude prices are therefore expected to remain closely watched in the coming weeks, as traders weigh the balance between geopolitical risk, supply management and broader macroeconomic signals. The latest price movement underscores how quickly sentiment in the oil market can shift, especially when geopolitical risk premiums begin to unwind after periods of heightened tension.
