Brent crude fell below $90 a barrel for the first time since August on Tuesday after President Donald Trump declared the war with Iran is effectively over.
Traders React as Oil Prices Slide
Global oil benchmarks tumbled as traders reacted to the President’s remarks and signs of easing tensions in the Middle East. Brent crude futures fell by around $2, or more than 2%, to drop below $90 a barrel to $89.66, marking its lowest level since August 31, according to Indiatimes and The Guardian. Meanwhile, US West Texas Intermediate (WTI) crude futures slipped nearly $2 to $85 a barrel.
The decline follows a near 6% drop in the previous session. Yahoo reported that benchmark Brent crude futures dropped 2.8% to $89.95 a barrel by early morning, while WTI slipped 2.6% to $84.56 a barrel.
Additional trading showed Brent for January delivery down 2.65% at $90.14 at 5:33 a.m., and West Texas Intermediate down 2.4% at $84.78. Crude prices subsequently tumbled on Wednesday, with U.S. West Texas Intermediate losing 8.3% to close at $88.12 a barrel and international benchmark Brent crude futures shedding 8.7% to settle at $94.62.
Stock markets climbed in response to the falling energy costs. Europe’s Stoxx 600 index gained 0.9% to 662.54, and London’s FTSE 100 index climbed 45 points to 10,828, as reported by The Guardian.
In the opening hours of European trading, the Stoxx 600 was 0.7% higher, while South Korea’s Kospi jumped 4.4% and Japan’s Nikkei Stock Average climbed 2.9%.
Airline stocks also rose on expectations of lower fuel expenses, with Lufthansa up 1.8% and Air France-KLM advancing 1.2%. Conversely, major oil producers BP and Shell saw their shares drop 1.7% and 1.5% respectively.
Daniela Hathorn, a senior market analyst at the trading platform Capital.com, said that global markets were extending their recovery supported by a sharp decline in oil prices and renewed buying in technology stocks.
ING strategists Ewa Manthey and Warren Patterson noted that traders had been paring back the extra cost priced in for geopolitical danger as hopes rose that tensions would ease.
Meanwhile, Rebecca Babin, senior energy trader at CIBC, stated that the sell-off could be getting a bit overdone as the market operated in a mode driven by high emotions following unexpected election results.
White House Declares Conflict Over
Iran militarily is effectively over. We are just keeping it the status quo,
Trump told reporters, adding that Iran has been decapitated
while noting the administration seeks a long-term solution to ensure Iran’s nuclear programme is defanged.
Trump also stated that he expected the conflict to end fairly soon and mentioned that Tehran was talking very politely with Washington.
Trump also stated that taking further military action doesn’t seem to be a very necessary thing – but we’re locked and loaded, ready to go for any reason,
according to reports.
The President warned that the United States has identified 38 Iranian bridges that could be destroyed within an hour if further military action became necessary.
We have 38 bridges in our site that we can knock down in literally one hour. They will all be down,
Trump told CNN, according to Indiatimes.
In a Truth Social post, Trump said further U.S. strikes against Iran seemed to be quite unlikely.
Following Tuesday’s elections where Democrats swept the House and Senate, JD Vance blamed the war against Iran for Republican midterm election reversals in a social media post, stating that the reason Republicans lost was the war.
Analysts Assess Long-Term Supplies
Energy analysts remain divided on the trajectory of global supplies and pricing. Goldman Sachs recently raised its December Brent crude forecast to $105 per barrel from $90, and increased its WTI forecast to $94 per barrel from $81, citing potential risks to global supplies.
In an upside scenario, the investment bank warned that Brent crude could reach $140 per barrel and average around $130 in 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average, Indiatimes reported.
Fereidun Fesharaki, chairman of energy consultancy FGE, told CNBC that the gap between Washington and Tehran remains too wide to bridge regarding enriched nuclear material, according to Quartz.
Bob McNally, president of Rapidan Energy and a former advisor to President George W. Bush warned that odds still favored military escalation because Iran remained hardened in its uncompromising position and Trump was unlikely to let go of his legacy goal.
Meanwhile, physical supply indicators showed signs of recovery.
Earlier coverage: US Stock Futures Rise as Investors Await Inflation Data and AI Earnings
