Oil prices fell sharply Tuesday, reversing gains made the previous day, after U.S. President Donald Trump suggested a swift end to the conflict with Iran. Brent crude futures were trading at $89.31 per barrel, down 9.75%, while West Texas Intermediate (WTI) fell to $85.90, a decrease of 9.36% as of early Asian trading, according to reports from Reuters.
The shift followed an interview with CBS News in which Trump stated the war was “remarkably complete, pretty much,” and that the U.S. Was “very far ahead” of its initial timeline for the campaign. He later told reporters the conflict would end “very soon,” though he cautioned against expecting a resolution within the coming week. These comments prompted a sell-off in energy markets as traders reassessed the risk of prolonged disruptions to Middle East oil supplies.
Oil had surged above $100 per barrel on Monday, briefly approaching $120, as conflict intensified and Iran announced Ayatollah Mojtaba Khamenei as its new supreme leader, a move Trump has previously deemed “unacceptable,” according to NBC News. The appointment of Khamenei, the hard-line son of Iran’s slain supreme leader, followed a period of escalating tensions, including Israeli strikes on Iranian oil depots and retaliatory attacks by Tehran targeting energy sites across the region.
Further contributing to the price decline, a Kremlin aide reported that Russian President Vladimir Putin held a call with Trump and presented proposals aimed at a rapid resolution to the conflict. Meanwhile, G7 finance ministers indicated their readiness to intervene to stabilize oil markets, though they stopped short of announcing a coordinated release of strategic petroleum reserves.
Despite the pullback, analysts predict continued volatility in crude markets. IG market analyst Tony Sycamore, as reported by Reuters, expects crude oil to trade within a wide range of $75 to $105 per barrel in the coming sessions, citing ongoing geopolitical risks. Disruptions to Gulf production are too weighing on the outlook, with Iraq cutting output at its southern oilfields by 70% to 1.3 million barrels per day, and Kuwait Petroleum Corporation declaring force majeure and beginning production reductions. Saudi Arabia has also initiated output cuts.
Iran has signaled a potential escalation if attacks persist. The Islamic Revolutionary Guard Corps stated that Tehran would “determine the end of the war” and warned it would not allow “one litre of oil” to be exported from the region if U.S. And Israeli strikes continue.
The easing of oil prices provided some relief to financial markets. Chinese assets rallied in early Tuesday trading, as the country relies on roughly 13% of its oil imports from Iran, making it particularly sensitive to price fluctuations, according to NBC News.
The situation remains fluid, and traders await further developments to determine whether diplomatic efforts will gain traction or if geopolitical tensions will escalate again.
