LONDON/KARACHI: Crude oil benchmarks have tumbled by almost 70 percent, marking one of the sharpest single-day drops in months, as market sentiment turned bullish on reports of nearing ceasefire talks between Israel and Iran.
Traders say the sudden shift stems from growing optimism that diplomatic channels are reopening, which could ease tensions in the Middle East—long a flashpoint for energy supply disruptions. This unexpected calm among regional powers reduced risk premiums and triggered a wave of sell-offs in futures markets.
Analysts note that anticipated easing of conflict led major hedge funds and oil traders to unwind long positions en masse, accelerating the fall in prices. Some government-connected fund managers reportedly sold crude inventory holdings, adding further downward pressure.
The immediate fallout has been felt across global energy markets. Middle Eastern oil exporters are now facing slimmer profit margins, while energy-dependent economies—including Pakistan—may find temporary relief in lower fuel imports and improved trade balances.
However, experts caution against jumping to conclusions. They argue that unless a sustained diplomatic de-escalation is confirmed, oil markets remain vulnerable to sudden reversals should new incidents occur in the region.
This story has been reported by PakTribune. All rights reserved.
