Oil prices experienced a significant decline on Tuesday following US President Donald Trump’s forecast of an imminent resolution to the Middle East conflict, alleviating fears of prolonged global oil supply disruptions.
At 07:15 GMT, Brent futures dropped by $6.79, or 6.9%, to $92.17 per barrel (bbl), while US West Texas Intermediate (WTI) crude saw a decrease of $6.55, or 6.9%, to $88.22/bbl.
Earlier, both benchmarks had plummeted by as much as 11% before partially recovering from those losses, reported Reuters.
The fall in oil prices comes after they surged past $100/bbl on Monday, the highest level since mid-2022.
The recent surge in oil prices was attributed to supply reductions by Saudi Arabia and other producers, coinciding with rising tensions resulting from the US and Israeli military campaign against Iran, dubbed Operation Epic Fury. The conflict has raised fears of major supply disruptions.
The volatility in prices has persisted since the operation’s commencement, which resulted in the death of the then Iranian Supreme Leader, Ayatollah Ali Khamenei.
In response, Tehran conducted retaliatory strikes at multiple sites throughout the Middle East.
The escalation disrupted oil shipments through the Strait of Hormuz, an artery for around 20% of the world’s daily supply, prompting some refineries to suspend operations and cutting regional output.
According to an aide from the Kremlin, as cited by the news agency, a subsequent decline in prices followed a conversation between Russian President Vladimir Putin and President Trump. During the conversation, proposals were discussed for a swift resolution to the conflict.
This development helped ease apprehensions regarding oil supply.
In an interview with CBS News on Monday, Trump expressed confidence that the conflict with Iran was nearing completion and noted that Washington was “very far ahead” of his initial time frame of four to five weeks.
Despite these developments, oil prices remain under pressure as Trump considers options such as easing sanctions on Russia and releasing emergency crude reserves to address surging oil prices globally, according to several sources.
Meanwhile, G7 nations indicated their readiness to take “necessary measures” in response to rising global oil prices but refrained from committing to the release of emergency reserves.
“Oil prices fall after Trump forecasts end to Middle East conflict” was originally created and published by Offshore Technology, a GlobalData owned brand.
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