Crude Oil Weekend Wrap: Prices See $97 to $85 Volatility as Iran–US Peace Hopes Trigger 4% Weekly Fall

Mumbai, June 13: Global crude oil markets witnessed extreme volatility during the week, with Brent crude swinging sharply between $97 per barrel and $85 per barrel before closing lower for the week. Prices were driven almost entirely by rapidly shifting geopolitical developments involving escalating US–Iran tensions, disruptions around the Strait of Hormuz, and a late-week reversal following emerging peace expectations that erased the war risk premium. 

Geopolitical Shock from Iran–Israel Conflict Pushes Oil Near $97 Per Barrel Early Week 

Global crude prices opened the week on a strong footing as escalating tensions between Iran and Israel intensified fears of supply disruption. Brent crude remained elevated near multi-week highs as markets priced in heightened geopolitical risk across the Middle East. Concerns around the Strait of Hormuz, which handles nearly 20% of global oil flows, remained the central driver of sentiment, keeping risk premium embedded in prices. 

By June 8, crude surged nearly 4–5% intraday, with Brent climbing above $97 per barrel and WTI crossing $94 per barrel, as renewed military exchanges between Iran and Israel triggered fresh supply shock fears. The escalation included strikes across key regional facilities, further amplifying concerns over global shipping lanes and energy transit security. 

Middle East Escalation and US Reaction Drive Oil Above $94 

On 8 June, crude markets reacted sharply to renewed geopolitical instability after Israel and Iran exchanged targeted strikes across strategic infrastructure. Brent jumped more than $4 per barrel intraday, while WTI also rallied sharply as traders reassessed supply risks. 

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The escalation intensified concerns over disruption in key maritime routes, particularly the Strait of Hormuz, reinforcing fears that nearly one-fifth of global crude supply could face delays or interruptions. At the same time, US political statements calling for de-escalation added volatility, causing intraday price swings exceeding 5% in Brent futures. 

Despite the surge, prices eased slightly by the close as markets attempted to balance escalation risks with expectations of diplomatic intervention. 

Ceasefire Signals Pull Brent Down 3% to Seven-Week Lows 

On 9 June, crude oil reversed sharply, falling nearly 3%, as temporary ceasefire expectations between Iran and Israel emerged. Brent crude settled at $91.45 per barrel, marking its lowest closing level in seven weeks, while WTI dropped to $88.20 per barrel. 

The decline reflected reduced immediate fears of supply disruption, although uncertainty persisted due to continued restrictions in the Strait of Hormuz. Market participants also weighed weakening demand indicators, including a significant 29% decline in China’s crude imports, which added downward pressure to prices. 

The session highlighted the fragile balance between geopolitical risk and weakening global demand signals. 

US Strikes and Inventory Draw of 9.12 Million Barrels Lift Prices 

Crude markets rebounded on 10 June after the US launched additional strikes on Iranian-linked targets, reigniting concerns over potential escalation. Brent rose to around $92.11 per barrel, while WTI climbed to $88.80 per barrel, recovering from prior-session lows. 

Adding further support, US crude inventories recorded a sharp drawdown of 9.12 million barrels, significantly above market expectations. This marked the eighth consecutive weekly decline, reinforcing the narrative of tightening supply conditions in the US market. 

However, analysts noted that despite supply tightness, broader demand concerns continued to cap upside momentum, preventing a sustained breakout above key resistance levels. 

Strait of Hormuz Closure Pushes Brent Above $95 per Barrel 

On 11 June, crude oil surged again after Iran’s military command announced the closure of the Strait of Hormuz, escalating fears of a severe global supply disruption. Brent futures rose more than $2.30 per barrel, reaching $95.40, while WTI climbed to $92.63 per barrel. 

The announcement triggered immediate concerns over global energy flows, as the Strait is a critical passage for crude shipments. US inventory data further reinforced tight supply conditions, with crude stocks falling by 7.2 million barrels, nearly double expectations. 

Despite the bullish trigger, markets began showing signs of demand sensitivity, with analysts highlighting weakening consumption trends across major importing economies. 

Trump Peace Signal Triggers Sharp Oil Crash Below $89 

On 12 June, crude markets experienced their most dramatic reversal of the week after US President Donald Trump announced the cancellation of planned military strikes against Iran and indicated that a peace agreement could be close. 

Brent crude fell sharply by nearly 2% intraday, slipping to $88.55 per barrel, while WTI dropped to around $86 per barrel, marking a two-month low. The announcement effectively removed a significant portion of the geopolitical risk premium that had driven prices earlier in the week. 

The decline reflected growing expectations of restored diplomatic engagement and potential reopening of disrupted trade routes, including the Strait of Hormuz. 

Weekly Price Volatility Flips Oil from $97 High To $85 Low 

Across the week, crude oil experienced one of its sharpest volatility cycles in recent months. Brent traded between a high of approximately $97–$101 per barrel and a low near $84–$85 per barrel, ultimately ending the week lower by around 4.2%, while WTI declined approximately 4.5%. 

The sharp price reversal highlighted the dominance of geopolitical developments, with markets shifting rapidly from supply disruption fears to peace-driven expectations within days. Saudi Arabia’s decision to cut official selling prices for Asia further capped upside momentum, signalling softer demand conditions across key consuming regions. 

Global Demand Weakness Limits Oil Rally Despite Supply Risks 

While geopolitical tensions dominated sentiment, underlying demand weakness continued to restrain sustained price gains. China’s crude imports fell 29% year-on-year in May, marking the lowest level in eight years. At the same time, broader global demand projections were revised lower, with expectations of a 1.1 million barrels per day decline in 2026 demand growth forecasts. 

OPEC also revised its demand outlook downward, highlighting a slowdown in consumption momentum. These structural demand concerns offset bullish supply shocks, keeping crude prices below the psychological $100 per barrel threshold despite repeated geopolitical escalations. 

Inventory Declines Highlight Tight Supply Conditions Globally 

US crude inventories extended their decline for an eighth consecutive week, falling by 7.2 million barrels, bringing total reductions since February to nearly 79 million barrels. This marked one of the steepest inventory drawdowns in recent years. 

OECD inventories are also projected to fall to their lowest levels since 2003, reinforcing the perception of a structurally tight supply environment. However, analysts noted that inventory tightness has not translated into sustained price strength due to simultaneous demand-side weakness. 

OPEC+ Output Hike of 188,000 Bpd Fails to Ease Market Tightness 

OPEC+ approved a production increase of 188,000 barrels per day for July, marking its fourth consecutive monthly hike. However, the impact on global supply remained limited due to logistical disruptions and restricted physical flow through key shipping routes. 

Production across OPEC+ members has already declined significantly due to supply chain bottlenecks linked to the ongoing geopolitical conflict, reducing the effectiveness of quota-based production increases. 

EIA Forecasts Signal Volatility Through 2027 

The US Energy Information Administration (EIA) projected Brent crude averaging around $105 per barrel in the near term, before moderating to approximately $89 per barrel in late 2026 and further easing to $79 per barrel in 2027. The forecast assumes gradual restoration of oil flows through the Strait of Hormuz beginning in late 2026, with full normalization expected by early 2027. 

The outlook reflects a transition from acute geopolitical disruption to potential oversupply conditions as production resumes globally. 

India Currency and Inflation Pressured by Oil Swings 

In India, crude volatility directly impacted financial markets and currency movement. The rupee weakened sharply early in the week, falling to 95.70 per US dollar, driven by rising oil prices and inflation concerns. However, it rebounded on 12 June, strengthening by 39 paise as crude prices declined. 

Higher oil prices also raised concerns around India’s import bill, inflation trajectory, and fiscal pressure, particularly for oil-sensitive sectors including aviation, logistics, FMCG, and paints. 

The week underscored the extreme sensitivity of global crude oil markets to geopolitical developments, particularly around the Middle East and the Strait of Hormuz. Rapid price swings between $97 and $85 highlighted how quickly risk premiums can build and unwind. While supply constraints and inventory draws remained supportive, weakening global demand and policy signals from producers continued to cap upside momentum. The period reflected a transitionary phase where geopolitical risk, demand softness, and policy responses collectively shaped volatile market conditions. 

Source 

https://ppac.gov.in/prices/international-prices-of-crude-oil 

https://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm