International News 03 February 2026
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Oil Prices Slide 4% as U.S.–Iran Tensions Ease and Risk Premium Unwinds
Oil prices fell sharply on Monday after U.S. President Donald Trump signaled a possible de-escalation with Iran, saying Tehran was “serious about negotiating” with Washington. Brent crude for April 2026 delivery dropped 4.1% to US$66.51 per barrel, while WTI for March 2026 slid 4.1% to US$62.51 per barrel. The decline erased gains from the previous session, when prices hit multi-month highs amid fears of escalating military conflict between the U.S. and Iran that had lifted geopolitical risk premiums throughout January. Analysts said the pullback reflects easing geopolitical concerns, a stronger U.S. dollar, and profit-taking after last week’s rally. Comments from Trump, confirmation that Iran is preparing for negotiations, and reports that Iran’s Revolutionary Guard would not conduct live-fire drills in the Strait of Hormuz were interpreted by markets as signs of de-escalation. At the same time, OPEC+ agreed to keep production unchanged for March, extending its cautious stance amid seasonally weaker demand. According to Capital Economics, underlying market conditions remain broadly bearish, with ample supply expected to cap Brent prices toward the end of 2026 despite intermittent geopolitical flare-ups.
RBI Intervenes to Support Rupee Amid Post-Budget Market Volatility
India’s central bank, the Reserve Bank of India (RBI), is believed to have intervened ahead of Monday’s spot market open to support the rupee, helping the currency withstand depreciation pressure following volatility triggered by the federal budget announcement. Market participants said the rupee had been at risk of opening near its all-time low of 91.9875 per US dollar, as local equities came under pressure. RBI intervention pushed the rupee stronger to around 91.77 per dollar, up about 0.2% from Friday’s close. A trader at a state-owned bank said the move was aimed at preventing the currency from breaking the key psychological level of 92 per dollar, noting that the central bank has stepped in repeatedly in recent sessions. The action is widely seen as a strong signal of RBI’s commitment to maintaining currency stability amid heightened market volatility.
Rising Geopolitical Risk Raises Fears of Major Oil Market Shock
Global oil markets face the risk of a major shock as the probability of a U.S. military strike on Iran increases. Citing Fortune.com, energy analyst Bob McNally of Rapidan Energy Group estimates a 75% chance of a U.S. attack in the coming days or weeks. Heightened tensions have already pushed Brent crude up 5% over the past week and 14% year-to-date, marking a clear shift from the previous downward trend. Unlike past incidents that caused only brief price spikes, markets are now increasingly pricing in the risk of sustained supply disruptions. Iran produces around 4.7 million barrels of oil per day, accounting for about 4.4% of global supply, with most exports flowing unofficially to China due to sanctions. The biggest risk, according to McNally, is a potential disruption or closure of the Strait of Hormuz, a critical chokepoint for roughly one-fifth of global oil and LNG trade. While markets often assume the U.S. Navy could secure the route quickly, Iran’s geographic position and military capabilities could pose serious challenges. Any prolonged disruption would not only shock oil markets but could also trigger intense competition for LNG cargoes in the spot market, amplifying volatility across global energy prices.