Oil prices drop 10% as Trump signals possible end to Iran conflict

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Oil prices drop 10%

Highlights

Oil prices drop over 10%: Brent is at $92.42 and WTI at $88.05, following Trump’s remarks on a potential end to the Iran conflict.
De-escalation signals: Trump’s statements on ending the war and securing tanker routes through the Strait of Hormuz reduced geopolitical risks.
Strategic reserves considered: Major economies may release oil from reserves to stabilize the market.

According to Bloomberg, Brent is trading at around $92.42 per barrel, while WTI is approximately $88.05 per barrel, significantly lower than the peaks earlier in the week.

The oil market reacts to Washington's statements

On Tuesday, prices for Brent and West Texas Intermediate (WTI) dropped by more than 10% after Donald Trump stated that the war with Iran could end "very soon" and promised the potential lifting of oil sanctions. He also highlighted the possible involvement of the U.S. Navy in escorting tankers through the Strait of Hormuz, a crucial oil transportation route from the Persian Gulf.

Markets interpreted these signals as a potential reduction in geopolitical risks, weakening the premium for supply disruptions. Later, prices partially corrected as new economic data emerged.

Prices had previously surged to $120

On Monday, Brent briefly spiked to around $120 per barrel after major producers in the region were forced to cut production due to the effective closure of the Strait of Hormuz—a narrow but vital channel through which about 20% of global oil shipments pass. This triggered a sharp reassessment of risks in the market.

Later, reports surfaced that the world's largest economies were discussing the release of oil from strategic reserves to mitigate potential supply disruptions.

Why this matters and what to expect

The ongoing conflict, which has now lasted for two weeks and involved more than a dozen countries, has already caused a significant rise in energy prices, adding additional inflationary pressure on many of the world's economies.

In the U.S., retail gasoline prices have reached their highest level since August 2024, increasing public attention on energy markets and placing political pressure on the Trump administration.

The key factors in the coming weeks will be:

The ongoing situation in and around the Strait of Hormuz.
Decisions from major economies regarding strategic reserves.
Global demand's response to the continuing uncertainty.

If de-escalation occurs, oil prices could continue their downward correction. However, any new spikes in tensions or attacks on infrastructure could quickly push prices back up.

We also informed gold prices have fallen under the pressure of a strengthening U.S. dollar and rising oil prices.

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