Raw materials turn downward. In a session marked by the recovery of the dollar and the de-escalation of political tensions between the United States and Iran, Brent oil loses close to 5% and puts $66 per barrel in danger. The market is unwinding part of the geopolitical risk premium after US President Donald Trump lowered his tone towards Tehran and the latest information points to possible negotiations between Washington and the Iranian regime, which increases the probability of an agreement and reduces the risk of a regional conflict.
“The generalized correction in the financial markets has reinforced the downward trend,” point out ING analysts, in a context of widespread sales in all raw materials and appreciation of the dollar, a factor that usually puts downward pressure on assets denominated in that currency.
The falls occur after several weeks of strong rise in crude oil, reaffirmed its decision to keep production quotas unchanged and pause new supply increases, prolonging the freeze agreed in November. Threats of a conflict with Iran and temporary supply interruptions associated with the cold storm in the United States had tightened the market at the start of the year and fueled the oil rally. After closing 2025 with its worst balance since the pandemic, Brent rose 16.2% in January, its best month since the beginning of 2022.
As supply normalizes, the investment bias begins to change. “Barring further supply disruptions, the easing of disruptions in the US and Kazakhstan should translate, in our view, into a better supplied oil market and put moderate downward pressure on crude oil prices in the coming weeks,” the UBS analysts note.
At the start of the year in which the unpredictability of the White House has once again marked the pulse of the markets, geopolitical tensions have regained prominence. US rhetoric around Greenland’s strategic role and warnings about — including the option of further action against its nuclear infrastructure — have raised global risk perceptions and returned geopolitics to the center of the financial scene. The markets are breathing a little easier today.
After several days of harsher rhetoric, in which Trump had warned of possible military actions, the US president now downplays the threats of the Iranian supreme leader, Ayatollah Ali Khamenei, about a regional war and has expressed confidence in the possibility of an agreement. The Republican has come to assure in the last few hours that Iran is negotiating “seriously with the United States about its nuclear program. A statement that is shared by the Iranian Foreign Ministry, which trusts that diplomatic efforts will avoid an escalation.
“The downward movement seems more like a readjustment of positions than a fundamental change,” Haris Khurshid, investment director at Karobaar Capital, told Bloomberg, who believes that, without a new supply shock, oil is returning part of the risk premium after having discounted a disruption that did not materialize.
The declines have their counterpart in gas. Gas prices in Europe fell by 14%, their biggest drop since August 2023, erasing part of the gains accumulated so far in 2026. In addition to the volatility of the last few hours in the raw materials markets, analysts highlight milder weather forecasts as the main cause of the correction.
After weeks of bitter cold that boosted demand, experts hope warmer weather will ease pressure on prices. European natural gas contracts rose nearly 40% in January, the largest monthly gain since 2022, driven by the cold, reduced inventories and supply interruptions in the US. In the short term, Rabobank analysts expect European gas markets to remain stable at around 30 euros per megawatt hour.
With the geopolitical premium losing weight and supply disruptions easing, sustained oil and gas gains depend more on disruption than demand. As those risks moderate, prices tend to return to ground more in line with fundamentals.
