Oil’s longstanding geopolitical risk premium has evaporated as traders interpret Donald Trump ’s foreign policy agenda as bearish for oil demand — and prices.
Since Russia invaded Ukraine in 2022, oil futures have routinely traded above their so-called fair value, elevated by the threat of war-related supply disruptions. But that risk premium has faded, even amid persistent conflict in the Middle East and expectations that the president-elect will try to curb crude exports from major producer Iran.