Oil whipsaws are back as geopolitics, not demand, drives near-term pricing.
A two-step move: relief, then renewed risk
Oil whipsaws started with a risk-premium fade on January 22. Brent fell about 2% to around $64.06 a barrel. WTI slid to about $59.36, Reuters reported.
Oil whipsaws were tied to three signals in that Reuters report. Trump toned down pressure linked to Greenland. He also softened rhetoric on Iran. Markets also saw “positive” movement on Russia-Ukraine talks that could change sanctions risk.
Oil whipsaws then flipped direction on January 23. Brent rose to about $64.49 and WTI to about $59.78. Reuters said prices rebounded after Trump renewed threats toward Iran.
What the market was pricing on the down move
Oil whipsaws often start when tail risk is repriced quickly. Reuters said the earlier drop followed comments that eased geopolitical fears. It also cited a larger-than-expected U.S. crude inventory build, which added bearish pressure.
Oil whipsaws were also sensitive to Ukraine diplomacy. Reuters said markets were weighing whether progress could raise the odds of some sanctions relief on Russian oil. That would increase global supply in traders’ models.
What changed on the rebound
Oil whipsaws returned when Iran risk came back into the frame. Reuters reported Trump said an “armada” of warships was heading toward Iran. He said he hoped military action would not be needed. Still, the comments revived supply-disruption concerns.
Oil whipsaws are amplified because Iran is not marginal in physical trade. Iran is a major OPEC producer. It is also a key supplier to China, Reuters noted. Any perceived threat raises a fast premium.
Shipping flows confirm the same story: barrels are rerouting
Oil whipsaws in benchmarks are mirrored by shifts in tanker flows. Reuters data show China is absorbing more Russian crude by sea in January. Reuters said China is set to take nearly 1.5 million barrels per day of Russian oil by sea, up from about 1.1 million bpd in December.
Oil whipsaws also reflect who is buying less. Reuters reported India and Turkey reduced buying as newer Western sanctions disrupted trade patterns. It said Turkey’s January imports fell to about 250,000 bpd, below its 2025 average. It also said India’s inflows dropped below 1 million bpd in December and were expected to stay near that level in January.
Oil whipsaws get sharper when discounts widen. Reuters said some Urals barrels were offered at discounts reaching up to $12 per barrel versus ICE Brent. It also said China’s Urals imports hit a record around 405,000 bpd, the highest since mid-2023.
Why this matters for macro and sanctions strategy
Oil whipsaws are telling a clear story about the “policy shock” channel. Headlines are moving both expectations and physical barrels.
Oil whipsaws matter for inflation prints and rate expectations. A sustained swing in crude changes fuel costs quickly. It also changes freight and insurance costs.
Oil whipsaws also matter for Russia’s export revenues. China’s higher intake can stabilize Russian cash flow. It can also deepen benchmark volatility by shifting the marginal barrel away from transparent markets.
What to watch next
Oil whipsaws will likely persist if three variables stay unstable.
1) Iran escalation signals
Oil whipsaws will track any change in U.S. posture, shipping warnings, or sanctions enforcement. Reuters has shown markets react to rhetoric even before action.
Russia-Ukraine diplomacy and sanctions expectations
Oil whipsaws will also respond to perceived progress toward talks. Any hint of sanctions relief can pressure prices by adding supply in models.
China’s “sanctions absorption” capacity
Oil whipsaws will be influenced by whether China can keep taking redirected Russian barrels. Reuters’ January data suggest it can, for now.