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January 4, 2026 12:58 PM UTC

Brent Crude Oil Price: Drops to $98 on War De-Escalation Hopes

Brent crude oil traded near $98 per barrel at the start of April, falling more than 2% after a sharp rally in March. Prices pulled back as President Donald Trump suggested that US military operations in Iran could end within two to three weeks. Yet, even with that signal, traders continue to watch a complex mix of geopolitical and supply risks. Source: Trading Economics De-Escalation Signals Shift Market Sentiment Oil markets reacted quickly after Trump indicated that a deal with Tehran could emerge, even if it is not required to end the conflict. His comments raised expectations that tensions may ease sooner than expected. At the same time, investors focused on his upcoming nationwide address, which could provide clearer direction. Will he confirm a withdrawal timeline? Or will he leave room for continued military pressure? However, conflicting signals persist. While Washington hints at de-escalation, Tehran has stated that no formal peace talks are underway. Iranian officials have also indicated a willingness to end the war, but only if specific conditions are met. This back-and-forth keeps markets on edge. Oil traders often react not just to actions, but to expectations. And right now, expectations remain divided. Fresh Attacks Keep Supply Risks Alive Despite falling prices, new disruptions continue to emerge across the region. Iranian drones struck fuel storage tanks at Kuwait International Airport, triggering a large fire and damaging critical infrastructure. These incidents follow a series of attacks targeting energy facilities and shipping routes. Each event raises concerns about supply stability. Even small disruptions can ripple across global markets, especially when they occur in key production hubs. Meanwhile, military activity has not slowed. Additional US troops have arrived in the region, signaling that operations remain active. Iran has also maintained its stance, preparing for a prolonged conflict if necessary. This creates a contradiction. On one hand, leaders talk about ending the war. On the other hand, military actions continue. Supply Data Adds Another Layer Of Pressure Beyond geopolitics, supply data has also influenced price movement. The latest figures from the American Petroleum Institute showed a sharp increase in US crude inventories, which rose by more than 10 million barrels last week. This surge suggests that supply currently exceeds demand, at least in the short term. When inventories rise, prices often face downward pressure. Yet, how long can that trend hold if global supply routes face disruption? Markets must now balance two competing forces. Rising inventories point to softer prices, while geopolitical risks suggest the opposite. Uncertainty Defines The Next Move Looking ahead, the oil market faces a critical moment. Trump’s upcoming address could shape expectations for weeks to come. Clear guidance may calm markets, while ambiguity could trigger fresh volatility. At the same time, ongoing attacks and military positioning continue to influence sentiment. Traders must assess whether diplomatic efforts will gain traction or stall under pressure.