Crude oil has fallen from $93.47 to $83.39 in a very short period of time.
A lot of people will look at the chart and wonder what changed.
The answer is the risk premium.
Oil rallied because markets feared the conflict in the Middle East would disrupt supply, particularly through the Strait of Hormuz, a route that handles roughly 20% of global oil shipments.
As those fears eased following signs of a pause in US-Iran hostilities and reduced expectations of a prolonged supply disruption, traders rapidly unwound those positions.
The takeaway?
Markets don't just price what's happening today.
They price what they think will happen next.
When the worst-case scenario became less likely, so did $90+ oil.