On Tuesday, Brent Crude fell 2.65% to $90.14 a barrel, while U.S. WTI Crude decreased by 2.4% to $84.78. President Trump indicated that the war with Iran could conclude 'fairly soon,' which has led to optimism in the market about a de-escalation of tensions.
The volatility in crude oil prices this year has been influenced by the ongoing conflict, which saw prices rise from around $60 to as high as $130 due to military escalations. Although crude oil flows through the Strait of Hormuz have largely recovered, the market remains sensitive to geopolitical developments.
Analysts from ING noted that the market is unwinding some of the geopolitical risk premium as expectations of a potential deal grow, although uncertainty remains regarding regional negotiations. Fereidun Fesharaki from energy consultancy FGE expressed skepticism about the likelihood of a peace deal, citing significant differences between the U.S. and Iran.
He suggested that Trump faces a critical decision regarding military action, especially in light of recent political developments in Israel. Overall, while the market reacted positively to Trump's comments, the situation remains fluid and could change rapidly based on future developments