Oil plunged as geopolitical risk premiums faded after US President Donald Trump said Washington is talking with Iran, while a broader commodities selloff exacerbated the slide. Brent plummeted more than 5% at one point and was trading near $66 a barrel, while US crude futures also nosedived. Trump downplayed Iran supreme leader Ayatollah Ali Khamenei’s threats of a regional war over the weekend, reiterating he’s hopeful they’ll make a deal. The Islamic Republic’s foreign ministry said it hopes diplomatic efforts will avert a war. The Tasnim news agency said talks between the US and Iran are likely in the coming days. “The move lower looks more like a positioning reset than a fundamental shift,” said Haris Khurshid, chief investment officer at Karobaar Capital LP. “With no new supply shock, oil is giving back some risk premium as the market recalibrates after pricing in near-term disruption that just didn’t materialize.”
Crude was also hit as commodities — particularly metals — came under intense selling pressure. Gold fell as much as 10% and copper at one point dropped more than 5% as they continued a retreat that started on Friday. The precipitous drop comes on the back of oil’s biggest monthly increase since early 2022, supported by broad-based flows into commodities during the same period. The prospect of conflict with Iran and pockets of supply disruption led to a surprisingly tight first month of the year. Still, the wider backdrop is one of elevated supplies, particularly in the first half of 2026. At current prices, the sharp reversal will trigger selling from trend-following commodity trading advisors, according to James Taylor, head of the quant service at consultant Energy Aspects. More selling would come if Brent falls below $65 a barrel, he added, noting that large levels of options open interest could also exacerbate price swings. Rapid shifts in financial flows have amplified the moves in oil prices so far this year. Traders began the year with bumper short positions that have quickly reversed after weeks of geopolitical tumult