Liquidity in crude markets drops sharply amid heightened uncertainty over Middle East tensions and supply disruptions.
Trading volumes in global oil markets have fallen to multi-month lows as traders avoid exposure to escalating geopolitical risks. Open interest in Brent and WTI futures contracts has declined by over 15% in the past two weeks, reflecting caution ahead of potential supply shocks from the Middle East conflict.
Prior to the recent volatility, liquidity had remained stable despite OPEC+ production cuts and seasonal demand fluctuations. Analysts note that similar liquidity crunches occurred during the 2020 Saudi-Russia price war and the 2014 oil market collapse, though current conditions are driven more by risk aversion than fundamentals.
Benchmark crude prices have seesawed within a tight range, with Brent hovering near $85 per barrel as thin trading exacerbates price swings. Market depth has deteriorated, increasing the risk of outsized moves on modest order flow.