Global oil prices plummeted and stock markets rebounded Tuesday following an unexpected suggestion from U.S. President Donald Trump that the conflict in the Middle East could soon be resolved. The shift in market sentiment came after weeks of escalating tensions and rising energy costs sparked by the U.S.-Israel offensive against Iran, initiated on February 28th.
“This will be over soon, and if it starts again, the hit will be even harder,” Trump stated Monday evening, responding to questions about the ongoing offensive. The comments triggered a rapid sell-off in crude oil futures, with prices falling as much as 10% before partially recovering to a roughly 5% decline by Tuesday afternoon.
West Texas Intermediate (WTI), the U.S. Benchmark, traded down 8.95% to $86.29 a barrel as of 0810 GMT. Brent crude, the European standard, fell 8.85% to $90.20 per barrel. Both grades had briefly dipped below $90 during early trading, a stark contrast to Monday when prices approached $120 a barrel in Asian markets, representing a more than 30% increase.
European natural gas prices also experienced a significant drop, falling around 15%. The Dutch TTF contract, a key European benchmark, settled near 48 euros after substantial gains the previous day. This reversal reflects the market’s sensitivity to geopolitical developments and potential disruptions to energy supplies.
Asian stock markets led the recovery, reversing Monday’s sharp declines. Seoul’s main index closed up 5.4%, while Tokyo gained 2.9%. Hong Kong and Shanghai also saw gains, rising 2.2% and 0.7% respectively. European bourses followed suit, with London, Paris, Milan, Frankfurt, and Madrid all posting gains exceeding 2% in early trading, with the exception of London, which rose 1.63% as of 0855 GMT.
The positive market reaction was further bolstered by signals from a G7 finance ministers’ meeting held Monday. The ministers affirmed their readiness to tap strategic petroleum reserves to stabilize prices should further increases occur. “The G7 call got a lot of attention (…) and then Trump added that the conflict could be over sooner than expected,” noted Chris Weston, an analyst at Pepperstone. “That combination was enough to fuel hope for some normalization of supply and logistics.”
Despite the easing of oil prices, Egypt announced a 30% increase in domestic fuel prices Tuesday, citing “exceptional” global energy pressures stemming from the Middle East conflict. The price hikes affect gasoline, diesel, and natural gas used in vehicles, highlighting the continued impact of regional instability on national economies.
