Oil prices dropped sharply on Tuesday, falling about 7% after reaching their highest levels in more than three years during the previous session. The decline followed comments from U.S. President Donald Trump suggesting that the conflict in the Middle East could end sooner than expected, easing concerns about prolonged disruptions to global oil supplies.
Brent crude futures fell by $6.79, or roughly 6.9%, to $92.17 per barrel at 08:40 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude dropped $6.55, also about 6.9%, to $88.22 per barrel. Earlier in the session, both benchmarks had plunged by as much as 11% before recovering part of their losses.
The sharp decline came just one day after oil prices surged above $100 per barrel for the first time since mid-2022. Monday’s rally was fueled by concerns that supply disruptions could worsen as the U.S.-Israeli conflict involving Iran escalated, while Saudi Arabia and other major producers maintained supply cuts.
Trump Comments Ease Supply Fears
Oil prices began retreating after Russian President Vladimir Putin reportedly held a phone call with President Donald Trump to discuss proposals aimed at quickly resolving the conflict. According to a Kremlin aide, the discussions focused on potential steps toward a settlement that could stabilize the region.
In an interview with CBS News on Monday, Trump said he believed the war with Iran was nearing completion and suggested that the timeline was progressing faster than his initial estimate of four to five weeks.
Market analysts noted that Trump’s comments helped calm investors who had been pricing in a prolonged geopolitical crisis. However, some experts also warned that the market reaction may have been exaggerated.
Suvro Sarkar, energy sector team lead at DBS Bank, said the market had likely overreacted to both the previous day’s surge and Tuesday’s sharp decline. He added that risks remain elevated, especially since Middle Eastern oil benchmarks such as Murban and Dubai crude are still trading above $100 per barrel.
Ongoing Tensions Continue to Influence Markets
Despite the easing in prices, tensions in the region remain high. Iran’s Islamic Revolutionary Guards Corps stated that it would ultimately determine the outcome of the conflict and warned that Tehran could block oil exports from the region if attacks by the United States and Israel continued.
At the same time, reports suggest that the United States is exploring additional measures to stabilize oil markets. These options reportedly include easing sanctions on Russian oil exports and potentially releasing emergency crude supplies from strategic reserves.
Analysts say such actions could help ensure that global oil supply continues to reach the market despite geopolitical tensions.
Priyanka Sachdeva, an analyst at Phillip Nova, noted that several developments—including discussions about Russian oil sanctions, Trump’s comments on possible de-escalation, and the potential use of strategic reserves by G7 nations—sent a signal to markets that supply disruptions might be limited.
As traders recognized that supply routes could remain open, the “panic premium” that had pushed oil prices above $100 per barrel began to fade, causing prices to retreat.
Oil Price Outlook Remains Uncertain
Goldman Sachs said it is maintaining its oil price outlook despite the recent volatility. The bank continues to forecast Brent crude at around $66 per barrel by the fourth quarter of 2026, with WTI expected to trade near $62 per barrel.
Meanwhile, G7 countries stated on Monday that they are ready to take necessary action if global oil prices continue to surge. However, the group stopped short of confirming whether emergency oil reserves would be released.
