Oil prices fell on predictions of easing tensions in the Middle East
Oil prices dropped on Monday after rising as high as $119 a barrel, as Trump mentioned he predicted the war in the Middle East could end soon, easing concerns about prolonged disruptions to global oil supply.
Brent futures fell $4.17, or 4.2%, to $94.79 a barrel at 03:45 GMT, while WTI fell $3.81, or 4%, to $90.96 a barrel. Both contracts recovered some of their losses after earlier falling as much as 11%.
Oil prices had surpassed $110 a barrel on Monday, reaching their highest level since mid-2022. Concerns that Saudi Arabia and other producers would cut supply during the escalation of the US-Israel-Iran conflict would lead to major disruptions to global supply.
According to an official, prices fell and concerns about prolonged supply disruptions eased after Putin shared proposals with Trump during their meeting aimed at finding a quick solution to the Iran conflict.
Trump's comments about a short-term war calmed the markets. While there was an excessive upward reaction yesterday, there was an excessive downward reaction today.
It would also be fair to say that the market underestimated the risks at these levels for Brent oil. Murban and Dubai oils are still well above $100 a barrel, so in practice, not much has changed in terms of facts.
The Iranian Islamic Revolutionary Guard Corps (IRGC) said they would "determine the end of the war" and that Tehran would not allow "a single liter of oil" to be exported from the region if US and Israeli attacks continue.
However, according to various sources, prices remain under pressure as Trump is considering easing oil sanctions on Russia and releasing emergency crude oil reserves as part of a series of options aimed at curbing rising global oil prices.
Discussions about easing sanctions on Russian oil, Trump's comments implying that the conflict could eventually subside, and the possibility of G7 countries using their strategic oil reserves all convey the same message.
After traders sensed that supply routes were still viable, the initial 'panic premium' that drove prices above $100 yesterday began to subside, and oil prices quickly retreated.
On Monday, G7 countries indicated their readiness to implement "necessary measures" in response to the rise in global oil prices, but made no firm commitment to releasing emergency reserves.
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