Oil Prices Slide Amid Volatility, Head for Steepest Quarterly Drop Since 2020

Oil prices fell in midday trading Tuesday, with West Texas Intermediate (WTI) crude dropping 1.23 percent to $69.88 per barrel, as markets continued to unwind geopolitical risk premiums despite ongoing volatility in the Middle East. Brent crude declined 0.62 percent to $73.45, while natural gas prices rose to $3.31. Bakken crude traded at a discount of $3.42 versus the WTI benchmark.

The downward pressure comes as oil is on track for its largest quarterly decline since the pandemic-driven market crash of early 2020. According to OilPrice.com, Brent crude is set to post a 30.4 percent quarterly plunge and a 22 percent monthly drop for June. This return to near pre-war price levels follows a U.S.-Iran memorandum of understanding signed in mid-June to continue negotiations.

However, the market's assumption of a stable reopening of the Strait of Hormuz is being tested. OilPrice.com reported that renewed missile attacks over the weekend have kept the critical chokepoint on edge. While transit numbers have improved from earlier in the conflict, daily crossings have slowed this week to 20-25 ships per day, with most movement currently inbound as shippers await safer passage.

"The price action in recent weeks reflects a market that is treating this temporary ceasefire between the US and Iran as a permanent deal," ING's Head of Commodities Strategy Warren Patterson said in a note cited by OilPrice.com. He added that at near $70 per barrel, the market has priced in close to zero geopolitical risk premium.

This sentiment was echoed in industry commentary. A recent Dallas Fed Energy Survey featured an exploration and production executive warning, "Markets can price risk, but they can't price a tweet," highlighting the difficulty of pricing in sudden geopolitical headlines, according to Rigzone.

For Bakken operators, the current price environment presents a dual challenge. The direct price of WTI hovering near $69, combined with a regional discount of over $3, pressures cash flows and drilling economics. The steep quarterly price drop may prompt renewed capital discipline and scrutiny of activity plans. The volatile but declining trend underscores the fragile balance between improving global physical flows—with global crude on water reaching 1.29 billion barrels—and the persistent threat of supply disruptions that could swing prices sharply in either direction.