Key Points
- Oil prices dropped more than 4% on Tuesday after surging to as high as $119 per barrel on Monday.
- Trump predicted the Middle East war could end soon, calming supply fears.
- Brent crude fell to around $94, while WTI dropped to about $91 per barrel.
- Possible easing of sanctions on Russian oil and release of emergency reserves pressured prices.
- Iran warned it could halt regional oil exports if US-Israeli attacks continue.
SINGAPORE: Global oil prices retreated sharply on Tuesday after surging to a three-year high a day earlier, as comments from US President Donald Trump suggesting a possible de-escalation in the Middle East conflict eased fears of prolonged disruptions to global crude supplies.
Brent crude futures dropped $4.17, or about 4.2%, to $94.79 per barrel in early trading, while US West Texas Intermediate (WTI) crude fell $3.81, or roughly 4%, to $90.96 per barrel. Earlier in the session, both benchmarks had plunged as much as 11% before trimming some of the losses.
Oil markets had rallied strongly on Monday, pushing prices above the $100 mark for the first time since mid-2022. The spike was driven by escalating tensions in the Middle East and production cuts by Saudi Arabia and other oil-producing nations amid the expanding US-Israeli confrontation with Iran, according to Reuters.
However, sentiment shifted after Trump indicated that the conflict might conclude sooner than expected. In a televised interview, he said the military campaign against Iran was progressing faster than initially projected and could end well ahead of the four- to five-week timeframe previously estimated.
Adding to market optimism, Russian President Vladimir Putin reportedly discussed proposals for a swift resolution to the conflict during a phone conversation with Trump, according to the Kremlin. The possibility of diplomatic progress helped ease concerns that the crisis could significantly disrupt global oil flows.
Analysts said the market’s reaction reflected the fading of a “panic premium” that had briefly pushed prices higher. According to energy market experts, traders quickly reassessed supply risks after signals that global oil shipments were unlikely to face severe long-term disruptions.
Despite the decline in benchmark prices, some Middle Eastern crude grades, including Murban and Dubai, continue to trade above $100 per barrel, suggesting that underlying supply concerns remain.
Meanwhile, tensions remain high on the ground. Iran’s Islamic Revolutionary Guards Corps warned that Tehran would determine the outcome of the conflict and threatened to halt oil exports from the region if US and Israeli attacks continued.
Oil prices are also facing downward pressure from discussions within Washington about potentially easing sanctions on Russian crude and releasing oil from strategic reserves. Such measures are being considered as part of broader efforts to stabilize energy markets and prevent a sustained spike in global fuel costs.
At the same time, the Group of Seven (G7) nations signaled readiness to intervene if oil prices surge further, though the bloc has not yet committed to releasing emergency stockpiles.
Market analysts say the coming days will be critical, as geopolitical developments and policy decisions by major producers and consuming nations continue to shape the direction of global energy prices.
