Dec’24 Brent futures fell from close to $80.00/bbl to $74.00/bbl this week as the geopolitical risk premium was priced-out and back in at a rate that puts no one’s mind to rest. As soon as part of the premium has been chipped out of the price, mid to low-70s were not far behind, and they must feel at home. Volatility has dropped as $74.00/bbl has proven less mean-reverting and more mean-unwavering, with Dec’24 trading between $73.50/bbl and $75.00/bbl for a few days. The Washington Post seems confident in Iran’s energy security, although this was a bit undermined by Netanyahu purposefully undermining it and reminding the international community that they will act however they feel ‘necessary’. Chinese news, positive or negative, has taken a breather this week. The geopolitical tension is with all hopes of de-escalating, leaving little to distract from the supply/demand that the market has been happy to pin at mid-70s.
