The decline in oil prices today is not particularly surprising, Carole Nakhle, Chief Executive Officer of Crystol Energy and Secretary General of the Arab Energy Club, told Rigzone.
“Much of the earlier price increase reflected geopolitical concerns rather than a fundamental deterioration in the supply-demand balance,” Nakhle said.
“As those concerns eased and markets took comfort from the fact that diplomatic channels remain open, part of the geopolitical risk premium naturally unwound,” Nakhle added.
The Crystol Energy CEO warned, however, that this does not mean geopolitical risks have disappeared.
“Daily price movements are likely to remain sensitive to political rhetoric and developments,” Nakhle said.
“But for a more sustained move in either direction, markets will need to see a more fundamental change, such as prolonged supply disruptions or a complete breakdown of diplomatic efforts,” Nakhle added.
The Crystol Energy CEO told Rigzone that today’s move is another reminder that while headlines can move prices in the short term, longer-term market direction continues to be determined by fundamentals.
In a report sent to Rigzone on Monday, Bjarne Schieldrop, Chief Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), highlighted that the Brent crude September contract traded down 6.9 percent last week and noted that, this morning, the October contract was gapping down $4.8 per barrel “on hopes that negotiations between the U.S. and Iran will get back on track again”.
Schieldrop warned, however, that “this optimism is most likely totally misplaced”.
“Iran has stated that it has not begged for a ceasefire and renewed negotiations in order to avoid ‘new devastating attacks by the U.S.’ as Trump has implied,” Schieldrop said.
“The U.S. midterm elections are getting closer and closer and are now only three months away (3 November). This what really matters to Trump right now and the war with Iran is a major negative for him vs the elections. Iran knows this very well,” he added.
“We have previously seen again and again that Trump declare a halt to U.S. attacks and ‘ongoing negotiations’ while Iran then fires yet another set of rockets and drones at U.S. military bases, U.S. Middle East allies, or ships sailing through the SoH,” he continued.
“This is most likely going to be the case also this time. Sit back and wait for the next set of barrages from Iran killing off this latest fresh optimism and crude oil price decline. Iran will probably take this war all the way to the U.S. midterm elections on 3 November,” Schieldrop went on to state.
The SEB Chief Commodities Analyst noted in the report that it is not only fresh negotiation-hopes which are “shifting oil down this morning”. He pointed out that crude oil keeps slipping through the Strait, adding that “more than 8.4 million barrels flowed out of the SoH last Friday according to ship tracking data (Bloomberg)”.
“And on August 1 there were five VLCCs docking at Saudi Arabia’s Red Sea Yanbu ports. Some are sailing south through the Bab-el-Mandeb strait with transponders off at night, while others are going through Suez to Med, around Africa and to Asia,” he added.
“West African crudes are also experiencing weakness versus competition from LatAm crudes (Guyana and Brazil),” he said.
“The overall crude oil picture is thus not all that tight as quite a bit of oil keeps flowing or slipping out of the SoH, Saudi exports from Yanbu, unsold cargoes with Iranian and Russian crude are floating at sea in Asia while Chinese net crude oil and oil product imports were closes to five million barrels per day below average in 2025,” he continued.
Schieldrop also highlighted in the report that crude oil from IEA member strategic reserves “still keeps flowing to markets to some degree”.
Rigzone has contacted the White House and the Iranian Ministry of Foreign Affairs for comment on Schieldrop’s statement. At the time of writing, neither has responded to Rigzone.
In a market analysis sent to Rigzone today, Monte Safieddine, Head of Market Research at Capital.com, outlined that oil prices gapped “significantly lower” before rising slightly “as President Trump said that peace talks will resume today and he called off a planned military strike”.
A market quick take posted on Saxo Bank’s website on Monday stated that crude oil traded sharply lower Monday after Trump chose not to pursue further attacks against Iran over the weekend and also pointed out that prices rebounded from intraday lows.
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