Oil prices down 6% as Trump eyes Iran war resolution
What's the story
Oil prices witnessed a massive drop today, falling by 6% after US President Donald Trump hinted at an early resolution to the ongoing conflict in the Middle East. The prediction has allayed fears of prolonged supply disruptions that had earlier driven prices past $100 a barrel. International Brent crude fell to $88.36 per barrel, while US crude dropped further down to $85.17.
Price surge
Prices surged past $100 a barrel yesterday
Yesterday, oil prices surged past $100 a barrel, hitting session highs of $119.50 for Brent and $119.48 for WTI. These were the highest levels since mid-2022. The spike was fueled by supply cuts from Saudi Arabia and other producers amid the escalating US-Israeli war with Iran. The situation raised fears of major disruptions to global supplies.
Diplomatic efforts
Russia proposes quick settlement to Iran war
The price surge was followed by a retreat after Russian President Vladimir Putin proposed a quick settlement to the Iran war during a call with Trump. This development eased fears of a prolonged supply disruption. In an interview with CBS News, Trump said he thinks the war against Iran "is very complete" and that Washington was "very far ahead" of his initial four- to five-week estimated timeframe.
Tensions escalate
Iran threatens to halt oil exports if attacked
In response to Trump's statement, Iran's Revolutionary Guards said they would "determine the end of the war," and that Tehran would not permit "one liter of oil" to be exported from the region if US and Israeli attacks continued. The comments did not lift prices, which were also under pressure as Trump is considering easing oil sanctions on Russia, and releasing emergency crude stockpiles amid rising global oil prices.
Production cuts
Gulf oil producers start cutting output
Gulf oil producers have started cutting output as the US-Israeli war on Iran disrupts shipping in the region. Over the weekend, Iraq slashed its production at its main southern oilfields by 70% to 1.3 million barrels per day. The Kuwait Petroleum Corporation began reducing output and declared force majeure, while Saudi Arabia has also started trimming production.