The oil market is showing growing indifference to the flurry of policy changes being pushed by U.S. President Donald Trump following his return to office. Despite his aggressive stance in his first weeks—criticizing OPEC, calling for an end to the war in Ukraine, and threatening tariffs on major U.S. crude suppliers—these moves have failed to trigger significant price fluctuations in the oil futures market.
Instead of seeing price surges or sharp drops, the market has largely remained stagnant. This week, a key measure of implied volatility for Brent futures, which gauges anticipated price swings, hit its lowest point since July.
“The oil market is exhibiting signs of confusion and paralysis in the face of the overwhelming number of new policy shifts,” analysts at Standard Chartered, including Emily Ashford, wrote this week. “With so much information to process and the understanding that a single social media post could cause a massive market shift, traders have opted to reduce their risk exposure.”
It’s important to note that the lack of volatility in the market began before Trump’s re-election. For example, the unprecedented sanctions placed on Russia by the Biden administration quickly lost their market impact.
OPEC+, the global oil producer group, continues to withhold barrels from the market, balancing supply shortages that help keep prices supported while maintaining enough spare capacity to address unexpected disruptions. Despite Trump’s earlier tariff threats on Canadian and Mexican oil imports causing a brief spike in prices, those gains quickly evaporated, as the U.S. seeks to negotiate an end to the Ukraine war with Russia.
Amidst all these shifting policies—ranging from Iran’s oil export pressures to efforts to ramp up U.S. production and replenish the nation’s strategic reserves—the market has remained largely unresponsive.
Brent futures have remained steady around $75 per barrel in recent months, with February’s fluctuations contained within a narrow $4 range. Speculators have scaled back on net-bullish positions over the past three weeks, marking one of the largest pullbacks in years. U.S. benchmark West Texas Intermediate (WTI) has seen a similar trend, with aggregate open interest dropping to its lowest level since November, accompanied by a decline in trading volumes compared to the peak levels of January.
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