Oil prices fell sharply after Trump hinted at a quick end to the Middle East conflict, easing supply disruption fears that had driven a record surge.
SINGAPORE: Oil prices retreated sharply on Tuesday, reversing a record surge from the previous session. The decline followed comments from US President Donald Trump predicting a swift end to the expanding conflict in the Middle East, which eased immediate concerns over prolonged global supply disruptions.
Brent crude futures fell USD 4.17, or 4.2%, to USD 94.79 a barrel. US West Texas Intermediate crude was down USD 3.81, or 4%, to USD 90.96.
Both benchmarks had surged past USD 100 a barrel on Monday, hitting their highest levels since mid-2022. That spike was driven by supply cuts from Saudi Arabia and other producers amid the US-Israeli war with Iran.
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Prices later retreated after Russian President Vladimir Putin held a call with Trump. A Kremlin aide said they discussed proposals for a quick settlement to the Iran war.
Trump said in a CBS News interview that he thinks the war is “very complete”. He added that Washington was “very far ahead” of his initial four- to five-week estimated timeframe.
“Clearly Trump’s comments about a short-lived war has calmed markets,” said Suvro Sarkar, energy sector team lead at DBS Bank. He noted there was an overreaction to the upside on Monday and an overreaction to the downside on Tuesday.
Sarkar added that the market is underappreciating risks at these levels for Brent. “Murban and Dubai grades are still well above USD 100 per barrel, so practically nothing much has changed in terms of ground realities,” he said.
In response, Iran’s Islamic Revolutionary Guards Corps said they would “determine the end of the war”. State media reported the IRGC’s spokesperson said Tehran would not allow “one litre of oil” to be exported from the region if attacks continued.
Prices remain under pressure as Trump considers easing oil sanctions on Russia. Multiple sources indicate he is also weighing releasing emergency crude stockpiles to curb spiking prices.
“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.
“Once traders sensed that supply routes could still be maintained, the initial ‘panic premium’ that had pushed prices above the USD 100 mark yesterday started to fade, and oil prices quickly pulled back.”
G7 nations said on Monday they were prepared to implement “necessary measures” in response to surging prices. They stopped short of committing to release emergency reserves.
The Sun Malaysia
