LONDON: Global oil prices declined on Tuesday after US President Donald Trump indicated that Washington could still secure a nuclear agreement with Iran, easing immediate fears of a wider conflict in the Middle East.
Brent crude futures fell by more than two per cent to $109.41 per barrel, while US West Texas Intermediate crude dropped 1.3 per cent to $107.25 a barrel. Despite the decline, both benchmarks continued to trade at levels more than 50 per cent higher than those recorded before the recent escalation in regional hostilities.
The market reaction followed remarks by Trump, who revealed that he had suspended a previously planned military strike against Iran in order to give diplomacy another opportunity.
According to the US president, Tehran had conveyed a fresh peace proposal to Washington, creating what he described as a “very good chance” of reaching a negotiated settlement.
Trump also reiterated that the United States remained focused on preventing Iran from acquiring a nuclear weapon, but suggested that diplomatic engagement could still deliver an agreement without further military escalation.
The comments provided temporary relief to global energy markets, which have been shaken in recent weeks by fears of disruption to oil supplies from the Gulf region, according to Reuters.
Investors have been closely monitoring developments amid concerns that any direct confrontation involving Iran could further threaten key shipping routes and energy infrastructure.
However, market sentiment remained cautious despite Tuesday’s decline in prices. Traders continued to weigh security risks following a drone strike in the United Arab Emirates over the weekend, an incident that renewed concerns about the vulnerability of regional energy assets.
Uncertainty surrounding the Strait of Hormuz also continued to influence market behaviour. The narrow waterway, through which a significant portion of the world’s oil exports passes, remains a major strategic flashpoint whenever tensions rise between Iran and Western powers.
Analysts said the prospect of renewed diplomatic negotiations helped calm immediate fears of supply disruptions, but warned that volatility in oil markets was likely to persist as long as geopolitical uncertainty in the Middle East remains unresolved.
