Oil prices retreated sharply on Tuesday after hitting their highest levels in over three years, following remarks by US President Donald Trump suggesting the war in the Middle East could end soon. The comments eased investor fears of prolonged disruptions to global oil supplies.
Brent crude futures fell $6.28, or 6.35 percent, to $92.68 a barrel by 10:24 a.m. Saudi time, while US West Texas Intermediate (WTI) crude dropped $6.24, or 6.58 percent, to $88.53 a barrel. Both contracts initially fell as much as 11 percent before moderating losses.
Prices had surged past $100 a barrel on Monday, marking the highest levels since mid-2022, amid supply cuts by Saudi Arabia and other producers and escalating tensions in the US-Israeli conflict with Iran. Concerns over major disruptions to global energy supplies drove the spike.
Markets eased after Russian President Vladimir Putin spoke with Trump and shared proposals aimed at a quick resolution to the war in Iran, according to a Kremlin aide. Trump told CBS News that the conflict was “very complete” and that Washington was “very far ahead” of his initial four- to five-week timeframe.
“Clearly Trump’s comments about a short-lived war have calmed markets. While there was an overreaction to the upside yesterday, we think there is an overreaction to the downside today,” said Suvro Sarkar, energy sector lead at DBS Bank. He noted that benchmark Middle Eastern oil grades, including Murban and Dubai, remain above $100 per barrel, highlighting that underlying supply risks have not disappeared.
Iran’s Islamic Revolutionary Guards Corps (IRGC) responded to Trump’s remarks by saying Tehran would “determine the end of the war” and would not allow “one liter of oil” to leave the region if US and Israeli attacks continued, according to state media citing an IRGC spokesperson.
Oil prices remain under pressure as Trump is reportedly considering easing sanctions on Russian oil and releasing emergency crude reserves to mitigate global price spikes. “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 Phillip Nova analyst Priyanka Sachdeva. She added that once traders believed supply routes could remain open, the initial panic premium above $100 per barrel began to fade.
G7 nations indicated readiness to take “necessary measures” in response to rising oil prices but did not commit to releasing emergency stockpiles. Analysts caution that while short-term volatility may ease, the situation remains fragile as geopolitical risks continue to influence global energy markets.
