Key Points:
- Oil prices crashed 4.7% as geopolitical fears faded.
- U.S. President Trump signaled openness to diplomatic talks with Iran.
- A broader market selloff saw gold plunge by 10%. Traders are recalibrating after fears of supply shocks didn’t materialize.
- India agreed to stop buying Russian oil in a new U.S. trade deal.
Oil prices took a massive nosedive on Monday, suffering their worst single-day loss since last June. West Texas Intermediate crude plummeted 4.7% to settle near $62 a barrel, while Brent futures followed a similar downward path. The sharp selloff happened after President Donald Trump signaled that diplomatic talks with Iran are on the table, causing the “war fear” premium in the market to vanish almost overnight.
Trump played down recent threats from Iran’s supreme leader, stating that he remains hopeful the two nations can make a deal. This change in tone immediately calmed investors who had been betting on a regional war.
Reports indicate that White House envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi plan to meet in Istanbul this Friday to discuss a way forward.
It wasn’t just oil that took a hit. A wave of selling swept across the entire commodities market. Gold prices crashed by as much as 10%, and copper dropped more than 5%. Market watchers say traders are hitting the reset button. After a January filled with anxiety about supply shocks, the market is realizing that actual disruptions haven’t materialized yet.
“The move lower looks more like a positioning reset than a fundamental shift,” said Haris Khurshid, an investment officer at Karobaar Capital. He noted that without a real supply shock, oil prices are simply giving back the gains they made on fear.
This reversal comes after oil had its best month in years during January. However, the bigger picture for 2026 still points to a world with plenty of extra oil. Experts warn that if Brent crude drops below $65, automated trading systems might trigger even more selling.
In a separate but related development, the global oil map is shifting again. The U.S. and India reached a new trade agreement. In exchange for lower tariffs on Indian goods, Prime Minister Narendra Modi agreed to stop buying Russian oil. This has caused shipments of Russian crude to India to tumble, leaving more sanctioned barrels floating unsold in the global market.
