Oil prices dropped more than $10 a barrel on Tuesday, following a sharp rise due to expectations of supply disruptions from the Middle East conflict. Brent crude fell by 10.6% to $88.51 per barrel, while U. S. West Texas Intermediate (WTI) dropped 11.2% to $84.16. The increase in prices had initially occurred when Brent exceeded $119 a barrel on Monday, fueled by supply cuts from Saudi Arabia and other producers.
The decline in prices followed statements from U. S. President Donald Trump, who suggested that the war in the Middle East might end soon, reducing fears of ongoing supply issues. Trump’s comments came after he and Russian President Vladimir Putin discussed potential solutions for a quick resolution to the conflict. However, experts noted that even if the war ends, it would take time for oil production to return to normal levels, especially if wells had been shut down for an extended period.
Iran responded to Trump’s comments, stating that it would not allow oil exports from the region if U. S. and Israeli attacks persisted. Trump is also considering easing oil sanctions on Russia and using strategic oil reserves to address high prices. Analysts pointed out that discussions about easing sanctions and tapping into reserves indicate that oil could still reach the market despite the conflict.
Saudi Arabia warned of severe consequences for global oil markets if the war continues, particularly regarding safe passage through the Strait of Hormuz, which could affect millions of barrels per day. Lastly, ADNOC reported the shutdown of its Ruwais refinery due to a fire, which added to supply disruptions. Goldman Sachs maintained its oil price forecast despite the current volatility, predicting Brent at $66 and WTI at $62 per barrel in the fourth quarter.
With information from Reuters
