Oil prices fell on Tuesday after US President Donald Trump said he would call off a strike on Iran at the request of key Middle Eastern leaders, easing concerns about an imminent escalation that could disrupt global crude supplies.
Global benchmark Brent crude for July delivery fell more than 2% to around US$109.15 a barrel. West Texas Intermediate futures fell 1.27% to $107.28 a barrel.
Trump said on Monday he would call off a planned strike on Iran tomorrow at the request of the leaders of Qatar, Saudi Arabia and the United Arab Emirates.
Before his comments on the Truth Social platform, there had been little indication that Washington was preparing for a military strike on Iran that would effectively end a ceasefire signed on April 8.
On Monday morning, Trump told New York that Iran knew what was coming. Axios reported that Trump was considering renewed military action after Tehran’s latest proposal in talks aimed at ending the conflict fell short of expectations.
Trump said at a White House event, “We are preparing to launch a very large strike tomorrow. I am holding it off for a while, maybe forever, but maybe for a while because we have had very large discussions with Iran and we will see what happens,” he said.
ING said oil markets continued to assess the ongoing supply disruptions in the Middle East, noting that China would help broker progress after recent Trump-Xi talks failed to materialize.
Analysts at the banking and financial services firm said some shipping activity through the Strait of Hormuz had resumed, including crude oil tanker shipments and Iraqi oil exports bound for Vietnam.
However, those flows are still well below normal levels and risk falling back quickly if geopolitical tensions continue to escalate in the Middle East.
They said the ongoing supply disruptions have left global energy markets increasingly reliant on existing inventories and alternative sources of supply to meet current demand.
The situation has also raised concerns about the stability of world oil supplies, especially as the Strait of Hormuz remains a vital route for global energy trade.
