Oil prices experienced a sharp reversal on Tuesday, falling 7 percent after reaching a more than three-year high the previous day, as former US President Donald Trump suggested a potential swift resolution to tensions in the Middle East. Brent crude futures declined $6.75, or 6.8 percent, to $92.21 a barrel at 10:12 GMT, while West Texas Intermediate (WTI) crude dropped $6.41, or 6.8 percent, to $88.36 a barrel. Both benchmarks had earlier fallen as much as 11 percent.
The price retreat followed a surge on Monday that saw oil climb above $119 a barrel, driven by concerns over supply disruptions linked to cuts by Saudi Arabia and other producers. According to a Kremlin aide, the price increase was partially reversed after Russian President Vladimir Putin spoke with Trump and presented proposals for a quick settlement to the conflict. Trump, in a CBS News interview on Monday, stated he believed the war against Iran was “remarkably complete” and that the US was “very far ahead” of his initial timeframe for resolution.
“Clearly Trump’s comments about a short-lived war have calmed markets,” said Suvro Sarkar, energy sector team lead at DBS Bank. “While there was an overreaction to the upside yesterday, we think there is an overreaction to the downside today.” Sarkar cautioned that the market may be underestimating the ongoing risks, noting that Murban and Dubai crude grades remained above $100 per barrel.
But, Iran’s Islamic Revolutionary Guards Corps responded to Trump’s comments by stating they would “determine the end of the war,” and warned that Tehran would halt all oil exports from the region if attacks by the US and Israel continued, according to state media reports.
The price drop coincided with reports that the Trump administration is considering easing oil sanctions on Russia and releasing crude from the US Strategic Petroleum Reserve as potential measures to curb rising prices. Multiple sources indicated these options were under consideration.
“Discussions around easing sanctions on Russian oil, comments from Donald Trump hinting that the conflict could eventually de-escalate, and the possibility of G7 countries tapping strategic oil reserves all pointed to the same message – that oil barrels will somehow continue to reach the market,” said Priyanka Sachdeva, a Phillip Nova analyst.
Despite the market’s reaction, Goldman Sachs maintained its oil price forecast, projecting Brent at $66 per barrel in the fourth quarter of 2026 and WTI at $62 per barrel, citing the fluid nature of the situation.
G7 nations acknowledged the surge in global oil prices on Monday and stated they were prepared to take “necessary measures,” but stopped short of committing to a release of emergency reserves. The G7 statement came as diplomatic efforts to de-escalate tensions in the region were described as being “in ruins” by CNBC, coinciding with a G7 meeting focused on Iran.
