Why Oil Is Dropping Sharply on July 27–28

The main driver is a fast unwind of the geopolitical risk premium that had inflated prices amid the US-Iran conflict and threats to Middle East supply routes.

🇺🇸🇮🇷 Over the weekend, Washington unexpectedly halted its air-strike campaign. At the same time, reports emerged of resumed US-Iran talks, easing fears of shipping disruptions through the Strait of Hormuz — one of the key routes for global oil trade.

The market reacted fast. On July 27, Brent lost about 11%, falling to roughly $85 a barrel. Selling continued on July 28, pushing prices into the $83–84 range. After the sharp prior rally, traders began locking in profits en masse, accelerating the decline further.

📉 Fundamental factors are adding pressure too. OPEC+ plans to raise output, while data from China points to weaker refinery utilization and cautious demand for crude.

Still, it's too early to say the risks have fully disappeared. The situation around Iran and the Strait of Hormuz remains the main source of uncertainty.

🔍 What's next: further de-escalation and successful talks could open the way for Brent toward $80 and below. A new flare-up in the conflict or a fresh threat to supply, on the other hand, could quickly push prices back above $90.

By Born2trade market research department

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