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Oil prices drop sharply on Trump's Iran war remarks
Global oil prices fell steeply Tuesday after U.S. President Donald Trump suggested the war in Iran would conclude "very soon," easing fears of prolonged supply disruptions from the Middle East.
Market reaction to Trump's comments
Brent crude, which had surged to nearly $120 a barrel Monday amid escalating tensions, retreated to around $93 following Trump's statement. U.S. West Texas Intermediate (WTI) crude dropped 4% to $90.96 before recovering slightly to $93.76 during Asian trading.
Stock markets rebounded as concerns over energy shortages waned. London's FTSE 100 opened 1.3% higher, while Japan's Nikkei 225 climbed 2.9% and South Korea's Kospi rose 5.4%.
Trump warns Iran over Strait of Hormuz
Despite signaling an imminent end to hostilities, Trump issued a stern warning to Iran regarding the Strait of Hormuz, a critical chokepoint for global oil shipments. "If Iran blocks the strait, they will face consequences twenty times worse than anything they've experienced so far," he posted on social media.
Iran's Islamic Revolutionary Guard Corps responded defiantly, vowing to prevent "a single liter of oil" from leaving the region. Traffic through the strait has nearly halted since the conflict began over a week ago.
Energy experts warn of lingering volatility
While prices dipped, analysts cautioned that markets remain on edge. Alberto Bellorin of InterCapital Energy described the situation as a "total tug-of-war," with prices likely to swing sharply based on developments in the conflict.
Amin Nasser, CEO of Saudi Aramco, warned of "catastrophic consequences" if the strait remains blocked, noting global oil stocks are at their lowest in five years. "The longer the disruption continues, the more severe the impact on the global economy," he said.
G7 considers strategic oil reserves
G7 nations discussed releasing emergency oil reserves to stabilize markets but took no final decision. Robin Mills, CEO of Dubai-based Qamar Energy, noted the dilemma: "Strategic reserves are finite. If the war ends soon, they won't be needed-but if disruptions persist, now may be the time to act."
UK Chancellor Rachel Reeves urged de-escalation and pledged support for a coordinated release of IEA reserves if necessary.
Prices remain elevated despite drop
Despite Tuesday's decline, oil prices remain roughly 20% higher than before U.S. and Israeli airstrikes on Iran began last week. Park Kee Hyun of the S. Rajaratnam School of International Studies attributed the premium to ongoing risk, predicting continued volatility as traders factor in geopolitical uncertainty.
"Trump's remarks suggest the war may end soon, but the real question is whether his words translate into concrete changes on the ground," Park said.
