Oil Prices Sent Into Unprecedented Volatility, Plunging Then Rebounding to $90 per Barrel

The volatility of oil prices on Tuesday reached an unprecedented level as benchmark crude tumbled by roughly $10 a barrel in a matter of hours. Prices then rebounded by about $11 from intraday lows, with Brent crude trading back around the $90 mark as investors tried to price the next turn in the Middle East conflict.

The latest jolt came after one of the most chaotic stretches for oil since 2022. Reuters reported that Brent crude had already fallen as low as $84.73 a barrel on Tuesday. At the same time, U.S. West Texas Intermediate dropped to $80.31, after President Donald Trump suggested the war with Iran could end soon, and markets briefly bet that supply risks might ease. Earlier reporting from Reuters said Brent had been around $91.71 after dropping more than 7%, a major retreat from Monday’s session high of $119.50.

But that relief did not last long. By later trading, Reuters reported Brent futures were back near $90 a barrel, showing how quickly the market reversed after the initial collapse. Another Reuters report noted that Brent had topped $116 on Monday and then fallen below $83 on Tuesday before bouncing again, underscoring just how disorderly trading has become. In practical terms, oil traders were digesting an eye-popping sequence: a slide of about $10 a barrel followed by a rebound of roughly $11, all within a very short window.

Oil is still being pushed around by fears over disrupted supply from the Middle East, especially around the Strait of Hormuz, one of the world’s most important chokepoints for crude shipments. When traders think the war could cool, prices dive. When they fear the conflict could intensify again, crude oil bounces almost instantly. Reuters has reported that the earlier surge above $119 was tied to fears over prolonged shipping and supply disruptions, while the drop on Tuesday followed comments that seemed to hint at de-escalation.

That leaves the market trapped between two competing narratives. One is that diplomatic or military developments could reopen flows and reduce the so-called risk premium that sent crude soaring. The other is that even optimistic rhetoric does not magically restore supply chains, tanker routes, refinery operations, or confidence.

For consumers and investors, the message is not especially comforting. Reuters reported that higher gasoline prices and stock-market volatility could hit both low and high-income Americans, while JPMorgan economists told Reuters that each 10% jump in oil prices can shave roughly 15 to 20 basis points from GDP growth. The economists said, “Effects also could ​be non-linear, with larger oil price spikes producing an ⁠even larger hit to growth.”