The decline in WTI reflects how energy markets respond to expectations of changes in geopolitical risks. Investors, sensitive to any potential disruption in crude oil supply security, quickly react to news suggesting a de-escalation of international tensions.
This behavior in oil prices is also framed within a broader context of fluctuations driven by international conflicts. Although the conflict between Israel and Lebanon had not directly disrupted supply, the perception of reduced geopolitical risks alleviated the uncertainty, pushing higher prices.
In contrast, last week, the price of WTI experienced a sharp rebound, driven by tensions in Ukraine. These conflicts had raised concerns over the risk of supply disruptions, which led to a spike in crude oil prices, reaching the highest levels since early November.
Crude oil prices are often more a response to investors' expectations than actual events. This week's drop, although significant, could be interpreted as the market's adjustment to perceived changes in geopolitical risks.
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