Oil Prices Decline As Trump Seeks to Alleviate Concerns Over Length of War

SadaNews - Oil prices fell after U.S. President Donald Trump stated that the war with Iran would end soon, as the conflict in the Middle East turns global energy markets upside down and raises new inflation concerns.

Brent and West Texas Intermediate crude dropped by more than 10% before recovering some of their losses following a volatile trading session on Monday that saw sharp price movements. Trump's efforts to calm the market pushed crude oil futures down on Tuesday, as he indicated that, in addition to ending the war, he would lift oil-related sanctions and have the U.S. Navy escort oil tankers through the Strait of Hormuz.

Brent crude, the global benchmark, fluctuated around $93 a barrel after it breached the $100 threshold and remained above it for most of the previous session. Monday's sharp volatility saw Brent crude trade within a range of about $36, the largest ever and the widest range since Russia's invasion of Ukraine in 2022.

Trump's Statements Reverse Market Trends

Trump's statements caused sharp fluctuations in oil prices, as they approached near $120 a barrel. He noted that the military campaign against Iran is "nearing its end," leading to significant declines.

Trump also pointed to several steps that could contribute to lowering oil prices, including the cancellation of crude-related sanctions. Although Trump did not specify which sanctions he would lift, observers point to Russian oil, particularly after the U.S. Treasury granted licenses last week to buyers of Russian oil to purchase some oil that was stranded at sea under certain conditions.

Trump's remarks came after a phone call with his Russian counterpart. He confirmed that the call addressed the Ukrainian crisis, in addition to the issue of Iran, considering that Russian President Vladimir Putin "wants to play a positive role regarding Iran."

Trump emphasized his desire to keep the Strait of Hormuz open, threatening Iran with "death and destruction" if crude supplies from the strait were affected, without detailing the next steps or how to ensure the critical strait remains open. He also stated that the U.S. Navy's escorting of ships in the strait would come "in due time."

In a press conference in Florida, Trump added: "We are seeking to keep oil prices low," noting, "Prices have risen artificially due to this campaign."

Iran War Pressures Oil Prices

The conflict has now entered its second week, with its effects stretching across more than ten countries, leading to rising energy prices, including oil, natural gas, and products like heating oil. Retail gasoline prices in the U.S. have surged to their highest level since August 2024, putting additional pressure on Trump.

The effective halt of shipping through the Strait of Hormuz, a narrow waterway through which usually about a fifth of the world's oil passes, has led several countries to cut their production as storage facilities fill up. The market is closely watching for the resumption of oil tankers' movement through the strait.

Trump did not provide further details about the oil tanker escort plan or the lifting of oil-related sanctions, except to acknowledge that he discussed the matter with the Russian president.

The sharp price movements on Monday saw West Texas Intermediate crude trade within a range of $38. Brent crude also fell by about $20 from the highest level recorded during the session, marking the largest drop ever between the highest trading price and the closing price in a single day.

In the latest trading, Brent future contracts for May fell by 6.1% to $92.91 a barrel at 1:22 PM Singapore time, after rising 6.8% on Monday, while West Texas Intermediate crude dropped by 6.6%, recording $88.47 a barrel.