Brent falls to USD 90 after Trump says Iran war may end soon

Oil prices are falling sharply after climbing to more than three-year highs, with North Sea Brent shedding more than eight percent. The drop follows comments by US President Donald Trump that the war in the Middle East could soon end. Fears of a prolonged disruption to oil supplies to global markets because of the situation in the Strait of Hormuz have eased.

Brent was down 7.6 percent at around USD 91.40 per barrel at about 9:30 CET. The price of US light crude West Texas Intermediate (WTI) was down eight percent at around USD 87.20 per barrel. Brent briefly reached USD 120 in the early hours of Monday.

Supply restrictions from Saudi Arabia and other Middle Eastern producers amid the escalation of the conflict with Iran sparked fears on Monday of a major disruption to global supplies and sent prices sharply higher. Prices later erased their gains and began falling in response to reports that Russian President Vladimir Putin had spoken by phone with Trump and, according to the Kremlin, had shared proposals aimed at bringing the war to a swift end. The war was triggered by attacks on Iran by the United States and Israel.

In an interview with CBS News, Trump then said he thought the war against Iran was practically over and that the United States was moving faster. Trump had initially estimated that the war would last four to five weeks.

"Trump's comments about a short war have clearly reassured the market. While yesterday (Monday — CTK note) markets reacted with an excessive rise, today we believe they are reacting with an excessive fall," said Suvro Sarkar, an analyst at financial institution DBS Bank.

He noted, however, that prices for Middle Eastern crude oil contracts Murban and Dubai remain above USD 100 per barrel, so essentially nothing fundamental has changed in terms of the actual market situation.

In response to Trump's remarks, Iran's Revolutionary Guard said it would decide when the war ends. Tehran, it said, would not allow oil exports from the region as long as attacks by US and Israeli forces continue.

Reuters, citing its sources, also reported that Trump is considering easing sanctions on Russian oil imports and releasing emergency oil reserves. Both steps are reportedly part of a package of measures aimed at curbing the sharp rise in oil prices.

Oil prices in dollars per barrel (about 159 litres)