Crude oil prices reversed a week of gains, dropping approximately 3% on Thursday as the market failed to sustain a risk premium following the collapse of the ceasefire between the United States and Iran.
The decline indicates that traders are currently discounting the likelihood of an immediate, large-scale supply disruption, despite the diplomatic breakdown.
He warned that a resumption of hostilities would be economically damaging for the US administration, particularly if oil prices were to spike sharply again.
The fragile truce, established through a Memorandum of Understanding, had been in place for only a short period before failing.
Daniel Benjamin, a former US ambassador, noted in an interview with WirtschaftsWoche that the agreement was structurally weak from the outset.
He warned that a resumption of hostilities would be economically damaging for the US administration, particularly if oil prices were to spike sharply again.
The market's muted reaction comes after President Donald Trump issued stark warnings that the US could face 'massive' military strikes if Iran continues to 'misbehave.' Despite this rhetoric, the immediate price action suggests investors are waiting for concrete evidence of supply chain interference before repricing energy assets.