Brent Is Approaching Last Week’s Low of 93.22, a Critical Level That Could Determine Whether the Unwinding of the Geopolitical Risk Premium Deepens

What’s happening: Oil prices extended their decline on Monday as President Donald Trump downplayed the prospect of renewed US military strikes against Iran. Brent crude CFD fell nearly 3% to around 95, approaching last week’s low of 93.22, while Dollar Index retreated 0.39% to 101.881, surrendering more than half of Friday’s 0.70% rally, and European equities advanced. US Treasury yields barely changed, and the probability of a December Fed hike hovered around 81%, against 80.5% in the latest Sunday reading.

Oil prices extended their decline on Monday as President Donald Trump downplayed the prospect of renewed US military strikes against Iran, encouraging a partial recovery in global risk sentiment. Brent crude CFD fell nearly 3% to around 95, approaching last week’s low of 93.22, a critical level that could determine whether the recent unwinding of the geopolitical risk premium deepens. Dollar Index retreated 0.39% to 101.881, surrendering more than half of Friday’s 0.70% rally, while European equities advanced. However, US Treasury yields and Fed tightening expectations barely changed, suggesting that Monday’s market moves reflected easing risk aversion rather than a fundamental shift in the monetary-policy outlook. The recovery in sentiment also remained uneven, with Asian equities mixed and the US session yet to test whether technology-sector concerns had genuinely subsided.

Follow Brent’s approach to critical support, the Iran talks and Dollar’s retreat on the ActionForex Telegram channel.

Brent Approaches Critical Support as Iran Escalation Fears Ease

Brent’s renewed weakness followed Trump’s comments to CNN on Sunday that further US attacks on Iran were highly unlikely if negotiations continued to progress toward an agreement. However, he maintained that military options remained available should diplomacy fail, including potential strikes against Iranian infrastructure.

The comments encouraged expectations that the US–Iran confrontation could move further toward a negotiated settlement. Yet the diplomatic picture remains uncertain. Maritime security incidents continued around the Strait of Hormuz over the weekend, while US Secretary of State Marco Rubio expressed skepticism about an imminent breakthrough. Qatar’s mediation efforts have kept negotiations alive, but disagreements over Iran’s nuclear programme and conditions for reopening Hormuz remain significant.

Iran: Easing Signals vs Lingering Risks

Beyond geopolitics, underlying oil-market fundamentals are also contributing to downward pressure. JPMorgan estimates cited by Reuters indicated that global oil supply exceeded consumption by 1.1 million barrels per day in September, with the surplus widening to 1.4 million in October. This suggests that Brent’s decline reflects not only changing expectations about military escalation but also a less supportive physical supply-demand balance.

Technically, Brent’s rebound from last week’s 93.22 low stalled below 100, leaving the market vulnerable to another test of that support. The 50% retracement of the advance from 70.14 to 117.45 stands at 93.80, creating a significant support area around 93.22–93.80.

A sustained break below this zone would strengthen the case that the decline from 117.45 is extending, potentially opening the way toward 88.21, the 61.8% retracement of the earlier advance. Such a development would indicate a deeper unwinding of the geopolitical premium, although it would not by itself establish that the underlying conflict or disruptions to Hormuz shipping had been resolved.

Conversely, a successful defense of 93.22 could preserve the recent consolidation, particularly if diplomatic progress stalls or fresh security incidents revive concerns over regional energy supplies.

Brent Scenarios Around 93.22–93.80

Dollar Gives Back Friday’s Gains Without a Shift in Fed Expectations

Dollar weakened broadly on Monday as the improvement in risk sentiment reduced some of the defensive demand that had supported it during last week’s market turmoil.

Dollar Index fell 0.39% to 101.881, reversing approximately 56% of Friday’s 0.70% advance. The daily currency heat map showed NZD and AUD leading the major currencies, while USD and CHF were among the weakest. The pattern was consistent with investors showing greater appetite for risk-sensitive currencies.

However, the interest-rate backdrop offered little explanation for Dollar’s retreat. US 2-year Treasury yield edged 2bps higher, while 10-year yield was broadly unchanged. Meanwhile, the probability of a December Fed rate hike hovered around 81%, compared with 80.5% in the latest available Sunday reading.

• Dollar Index: down 0.39% to 101.881, reversing about 56% of Friday’s 0.70% advance
• Heat map: NZD and AUD leading, USD and CHF among the weakest
• US 2-year Treasury yield: up 2bps
• US 10-year Treasury yield: broadly unchanged
• December Fed hike probability: around 81%, against 80.5% in the latest Sunday reading

The contrast suggests that Monday’s Dollar weakness was primarily associated with easing risk aversion and possible position adjustment, rather than a reassessment of the Fed’s tightening trajectory.

That distinction matters because Friday’s stronger-than-expected US employment report had reinforced expectations for additional tightening. October nonfarm payrolls rose by 165K, while unemployment declined to 4.1%, supporting the argument that the US economy could withstand further restrictive policy.

With that underlying monetary-policy outlook largely unchanged, Dollar’s decline may prove vulnerable if risk aversion returns or upcoming inflation data reinforce expectations for further rate increases.

Equity Relief Remains Uneven as Nvidia Adds Fresh Uncertainty

The improvement in risk sentiment was most visible in European equities. Germany’s DAX gained 1.04%, France’s CAC advanced 0.74%, and Britain’s FTSE rose 0.69% during the session.

However, Asia delivered a more mixed picture. Japan’s Nikkei closed 2.33% higher, while South Korea’s Kospi lost 0.81% and Hong Kong’s Hang Seng slipped 0.13%. The divergence suggests that the rebound was not yet broad enough to establish a synchronized recovery across global equity markets.

• DAX: up 1.04% (at the time of writing)
• CAC: up 0.74% (at the time of writing)
• FTSE: up 0.69% (at the time of writing)
• Nikkei: closed 2.33% higher
• Kospi: down 0.81%
• Hang Seng: down 0.13%

Technology-sector developments also complicated the outlook. After last week’s severe selloff in AI-related stocks, Nvidia faced fresh company-specific uncertainty following reports of a foreign intelligence effort targeting CEO Jensen Huang. Nvidia’s board announced an independent investigation while stating that it had no reason to believe national security or company secrets had been compromised.

Nvidia shares were reportedly down more than 4% in pre-market trading, raising the possibility that the company could weigh heavily on US technology indexes when Wall Street opened.

However, Nvidia’s weakness should not automatically be interpreted as evidence of renewed selling across the wider AI sector. The more important test will be whether pressure spreads to other semiconductor companies and the broader equity market, or whether investors distinguish the company-specific development from concerns about AI valuations and investment returns.

Relief Session, Not Yet a Reversal: Tests From Wall Street and US CPI

Monday’s market movements point to a partial unwinding of last week’s risk aversion, but not yet a durable improvement in the underlying macroeconomic outlook.

Brent’s approach to 93.22 is the clearest immediate technical test. A sustained break would strengthen the case for further unwinding of the oil risk premium, although the consequences for Treasury yields, Dollar and equities would depend on whether investors interpret the decline primarily as geopolitical relief or evidence of weakening demand and excess supply.

Meanwhile, the US equity session will provide a more direct assessment of whether technology-sector confidence is stabilizing. Broad weakness beyond Nvidia would challenge the relief narrative, while more resilient market breadth would suggest that last week’s selling pressure is becoming less widespread.

Attention will then turn to Tuesday’s US CPI report, scheduled for 13:30 GMT. With a December Fed hike already heavily priced, the inflation figures could determine whether the monetary-policy expectations supporting Dollar and Treasury yields remain intact. Until those tests are resolved, Monday’s improvement is better characterized as a relief session than confirmation of a broader market reversal.

Related Coverage

Currencies and Metals Ahead of US CPI

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• Gold Rebounds as Oil and Yields Fall, but 4,200 Resistance Awaits US CPI: Gold has rebounded strongly from its late-October low, gaining 5.02% last week as falling oil prices and US Treasury yields supported the recovery. The advance now faces a critical resistance cluster between 4,160 and 4,200, just ahead of Tuesday’s US CPI report. With markets already pricing a high probability of another Fed rate hike in December, the inflation data could influence expectations for further tightening in 2027, and a decisive break above 4,200 would strengthen the bullish recovery case while rejection could revive the broader bearish trend.

Growth, Inflation and Central Banks

• Eurozone Sentix Falls to 2.4 as Recovery Expectations Weaken, Germany Shows Signs of Stabilization: Sentix Investor Confidence slipped from 2.7 to 2.4 in November, beating expectations of 1.8 but revealing weakening recovery prospects, with the Current Situation index negative at -3.3 and Expectations falling to 8.3, their lowest level since June. Sentix continues to characterize the Eurozone economy as stagnant, citing high energy prices, financing costs and political uncertainty. Germany provided some encouragement, with current conditions improving for a fifth consecutive month though expectations were unchanged, and improving inflation sentiment offers modest relief without a convincing recovery.
• RBA’s Hunter Warns AI Boom Could Lift Inflation and Interest Rates Before Productivity Gains Arrive: Assistant Governor Sarah Hunter warns that the AI investment boom could raise inflation and interest rates before its promised productivity benefits emerge, as rapid spending on data centres, semiconductors and energy infrastructure boosts demand and strains some supply chains while measurable economy-wide productivity gains remain limited. She also sees potential upward pressure on the neutral interest rate as businesses compete for investment capital. Although AI’s long-term inflation impact may be broadly neutral, the transition could expose financial markets to significant risks if investment returns disappoint.
• China’s PPI Accelerates on Energy Shock, but Cooling CPI Exposes Weak Domestic Demand: producer price inflation accelerated from 5.0% to 5.7% in October, exceeding expectations as elevated energy prices pushed up costs across mining, raw materials and petroleum processing, yet headline CPI slowed from 0.9% to 0.7% and core inflation eased to 0.8%. The divergence suggests manufacturers are struggling to pass higher input costs to consumers, raising the risk of margin pressure, and underlying demand weakness continues to complicate the inflation outlook despite the external energy shock.

FAQ

Why did Brent oil fall on Monday?

Brent fell nearly 3% to around 95 after Trump told CNN on Sunday that further US attacks on Iran were highly unlikely if negotiations continued to progress, though he kept military options open. Fundamentals also weigh: JPMorgan estimates cited by Reuters show global supply exceeding consumption by 1.1 million barrels per day in September and 1.4 million in October. Brent is now approaching last week’s 93.22 low, where a sustained break could open the way toward 88.21.

Why did Dollar retreat if Fed expectations barely changed?

Dollar Index fell 0.39% to 101.881, reversing about 56% of Friday’s 0.70% advance, as easing risk aversion reduced some of the defensive demand that supported it last week. The US 2-year yield rose only 2bps, the 10-year was broadly unchanged and the December hike probability hovered around 81%, against 80.5% on Sunday. The weakness was therefore primarily associated with easing risk aversion and possible position adjustment, not a reassessment of the Fed’s tightening path.

Does Nvidia’s drop signal renewed selling across AI stocks?

Not automatically. Nvidia was reportedly down more than 4% in pre-market trading after reports of a foreign intelligence effort targeting CEO Jensen Huang, and its board announced an independent investigation while saying it had no reason to believe national security or company secrets were compromised. The test is whether pressure spreads to other semiconductor companies and the broader market, or whether investors separate this company-specific development from concerns about AI valuations and investment returns.

Key Takeaways

• Oil extended its decline on Monday as Trump downplayed renewed US strikes on Iran, with Brent falling nearly 3% to around 95 and approaching last week’s critical low of 93.22.
• JPMorgan estimates cited by Reuters show global oil supply exceeding consumption by 1.1 million barrels per day in September and 1.4 million in October, so fundamentals are also pressuring Brent.
• Brent has significant support around 93.22–93.80, including the 50% retracement of the advance from 70.14 to 117.45, and a sustained break would open the way toward 88.21.
• Dollar Index fell 0.39% to 101.881, reversing about 56% of Friday’s 0.70% advance, with NZD and AUD leading and USD and CHF among the weakest.
• The US 2-year yield rose only 2bps, the 10-year was broadly unchanged and the December hike probability was around 81% against 80.5% on Sunday, pointing to easing risk aversion rather than a Fed reassessment.
• European equities advanced, with DAX up 1.04%, CAC up 0.74% and FTSE up 0.69%, but Kospi lost 0.81% and Hang Seng 0.13%, and Nvidia was reportedly down more than 4% pre-market on reports of a foreign intelligence effort targeting its CEO.
• Tuesday’s US CPI report at 13:30 GMT and the Wall Street open are the next tests, and Monday is better characterized as a relief session than confirmation of a broader reversal.

What to Watch Next

The immediate technical test is Brent at 93.22–93.80: a sustained break would point toward 88.21 and a deeper unwinding of the oil risk premium, while a successful defense would preserve the recent consolidation, particularly if diplomacy stalls or fresh Hormuz incidents emerge.

Watch also whether weakness extends beyond Nvidia when Wall Street opens, and Tuesday’s US CPI at 13:30 GMT, which with a December hike heavily priced could show whether the monetary-policy expectations supporting Dollar and Treasury yields remain intact.

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