Oil prices fall sharply after comments from US President Donald Trump suggested the war with Iran could end soon. The remarks eased fears in global energy markets, although crude prices remain well above levels seen before the conflict began.
The sudden drop followed a dramatic surge in oil prices earlier in the week. Both major benchmarks briefly crossed the $100 per barrel mark for the first time since Russia’s invasion of Ukraine in 2022.
However, investors reacted quickly after Trump said during a phone interview that the conflict might be nearing its conclusion. The market interpreted the statement as a sign that oil supply disruptions could soon ease.
Brent crude, the global benchmark, fell 11.28% to settle at $87.80 per barrel. Meanwhile, US benchmark West Texas Intermediate dropped 11.94% to close at $83.45 per barrel.
Even after the decline, prices remain significantly higher than before the conflict started in late February.
Oil prices fall but markets remain volatile
The sharp market reversal highlights how sensitive energy markets remain to geopolitical developments. Just hours before the drop, oil had surged above $100 per barrel.
At one point Monday, Brent crude approached $120 per barrel as traders feared a prolonged supply disruption.
The main concern centers on the Strait of Hormuz, a narrow shipping channel that carries roughly one fifth of the world’s oil exports. Any disruption to tanker traffic through the strait can immediately shake global supply chains.
Iran has threatened to attack vessels passing through the waterway, forcing many shipping companies to halt operations in the region.
Although oil prices fall after Trump’s remarks, investors remain cautious because the conflict’s outcome remains uncertain.
Oil prices fall after Trump comments
Trump’s comments during a CBS phone interview appeared to calm market sentiment. He said the war was “very complete, pretty much,” which traders interpreted as a signal that hostilities might soon decrease.
However, the situation became less clear later in the day.
US Defense Secretary Pete Hegseth stated during a Pentagon briefing that the conflict would continue until the United States fully defeated its enemy.
The contrasting messages have created confusion in global markets.
Investors must now weigh the possibility of a rapid ceasefire against the risk of a prolonged war.
Energy traders often respond quickly to political signals because supply disruptions can change the balance of oil markets almost overnight.
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Saudi Aramco warns about oil supply disruption
Despite the price drop, major oil producers remain concerned about the war’s long-term impact.
Saudi Aramco, the world’s largest oil exporter, warned that the conflict could trigger catastrophic consequences if shipping disruptions continue.
Aramco chief executive Amin Nasser said the Strait of Hormuz plays a critical role in global energy markets. The longer oil flows remain disrupted, the greater the risk to the global economy.
He also noted that global oil inventories currently sit at a five-year low. This situation leaves markets more vulnerable to supply shocks.
Because exports from the region have slowed dramatically, several Middle Eastern producers have already begun cutting output.
Saudi Arabia and Kuwait face storage challenges because tankers cannot easily move crude out of the region.
Emergency reserves considered as oil prices fall
Governments and international organizations are exploring ways to stabilize the market.
Fatih Birol, executive director of the International Energy Agency, said member countries would meet to assess supply conditions and decide whether emergency reserves should be released.
The Group of Seven nations have already discussed the possibility of coordinated oil reserve releases.
Energy analysts estimate that strategic reserves held by advanced economies could reach about one billion barrels.
Such reserves could temporarily ease supply shortages and help prevent further price spikes.
However, analysts warn that these measures would only work if the conflict remains relatively short.
If the war continues for months, strategic reserves alone may not stabilize the market.
Uncertain outlook for global oil markets
The outlook for oil prices remains uncertain as governments search for ways to reopen shipping routes through the Strait of Hormuz.
The United States has proposed providing insurance for tankers traveling through the region. Officials have also suggested naval escorts to protect vessels.
However, shipping companies remain hesitant to send ships through active conflict zones.
Trump also warned Iran against blocking the waterway, promising strong retaliation if the country interferes with oil flows.
Meanwhile, Saudi Aramco says production could recover quickly once shipping resumes. The company told analysts it could increase output within days if export routes reopen.
Until a clear solution emerges, energy markets will continue reacting sharply to political developments.
Although oil prices fall for now, the war’s uncertain timeline means volatility will likely remain a defining feature of global oil markets.
