Oil eases from four-month high as traders monitor Iran risks

Oil eased from a four-month high as traders monitored President Donald Trump’s renewed threats against Iran, while a weaker dollar boosted the appeal of commodities priced in the US currency.

Brent traded below $68 a barrel after jumping 3% in the previous session to settle at the highest since September. Trump reiterated on Tuesday that a “big armada” was headed to the Middle East, adding that hopefully the US won’t have to use it. So far, there has been no flare-up of tensions in recent days.

Trump’s focus on Iran followed the Islamic regime’s crackdown on protests against the government of Ayatollah Ali Khamenei, injecting some risk premium into oil prices and keeping the cost of bullish options high relative to bearish ones. That has led futures to start the year on a strong footing, up more than 10% this month, despite forecasts for a glut as OPEC+ and other producers pump more.

A gauge of the dollar tumbled to the lowest in almost four years on Tuesday after Trump said he wasn’t concerned about the currency weakening. The drop has been fanned by his unpredictable policymaking, including threats to take over Greenland and pressure on the Federal Reserve.

“Market sentiment appears to be gradually turning more positive, as the bearish oversupply narrative so prevalent in the second half of 2025 weakens,” Standard Chartered analysts including Emily Ashford wrote in a note. “We envisage an uptick in volatility and increasing focus on both supply and demand risks..”

The prompt spread for both oil benchmarks — the difference between their two nearest contracts — has widened in a bullish backwardation structure over the course of this month, indicating tighter supply. That gauge topped $1 for Brent on Wednesday.

© 2026 Bloomberg

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