• Brent and WTI crude futures turned negative and fell nearly 3% after President Trump said the U.S. would halt funding to Israel after 2026.
  • The announcement injects fresh uncertainty into Middle East geopolitics, prompting traders to reassess the geopolitical risk premium in oil.
  • The move extends a period of sharp volatility, with prices whipsawing on diplomatic signals and military developments.

Oil markets reversed sharply on November 3, with Brent and U.S. West Texas Intermediate crude futures turning negative and falling nearly 3% intraday after President Donald Trump said the United States would stop providing funding to Israel after the end of 2026. Trump described the move as an agreement already reached with Prime Minister Benjamin Netanyahu. “We give Israel $4 billion a year … we’re stopping,” he told reporters, adding, “Now we’ll help Israel if they need it.”

The selloff marked a swift turnaround from earlier gains. Brent had climbed 1.76% to $106.61 a barrel by 07:44 GMT, and WTI was up 1.66% at $98.06, as renewed military activity suggested Washington and Tehran remained far apart. The subsequent plunge underscored how quickly sentiment can shift in a market hyper-sensitive to headlines. The exact intraday lows were not independently verified at the time of reporting, but the direction was clear: futures moved below the previous session’s close.

The broader backdrop is one of extreme volatility. On November 2, both benchmarks settled down more than 7%—Brent at $104.77 and WTI at $96.46—on hopes that negotiations could reduce Middle East supply disruptions. Those hopes were fragile. Reuters (NASDAQ:TRI) reported increased attacks on tankers in the Strait of Hormuz and signs of higher shipments from some major exporters, including a rise in Saudi crude exports in October versus September, according to two of three ship-tracking companies cited. ADNOC’s chief executive said global oil inventories had been depleted by nearly 1 billion barrels since the war disrupted Hormuz shipping—an industry estimate that highlights the market’s tight physical backdrop.

The funding announcement adds a new layer of political uncertainty. The existing U.S.-Israel assistance framework is a 2016 memorandum covering fiscal years 2019–2028, pledging $38 billion, including $3.3 billion annually in Foreign Military Financing and $500 million for missile defense—roughly $3.8 billion combined, close to Trump’s rounded figure. Trump’s statement concerns stopping payments after calendar-year 2026, while the memorandum extends through September 2028. It remains unclear which programs would be affected and how Congress might respond. The White House did not provide further details, and requests for comment from the Israeli government were not immediately returned.

Traders are now left to parse whether the announcement signals a broader shift in Washington’s regional commitments or a push toward diplomacy. “The market is trading headlines, not fundamentals,” said one Singapore-based oil trader, who asked not to be identified. “Every statement from Washington or Tehran moves prices by dollars in minutes.”

Analysts caution that a one-session decline does not establish a durable trend. Raymond James (NYSE:RJF) analyst Pavel Molchanov attributed the prior day’s selloff to diplomatic progress but warned of repeated “false dawns.” KCM Trade’s Tim Waterer said hopes for a ceasefire and the absence of major weekend escalation had taken some pressure out of prices, but the underlying risks remain. Goldman Sachs (NYSE:GS) has said Brent could reach $140 in 2027 if Gulf output remains 3.5 million barrels a day below its 2025 average—a conditional scenario, not a forecast.

With physical supply still constrained and geopolitical risk elevated, oil is likely to stay volatile. The immediate focus will be on whether Israel confirms the funding agreement and how Iran negotiations evolve. For now, the market’s message is clear: headline risk is back, and the geopolitical premium is anything but settled.

Correction: An earlier version of this article misstated the exact timing of the intraday decline. The error has been corrected.