Oil prices tumble after Donald Trump says Iran war could end “very soon”

Global oil prices plunged on Tuesday after U.S. President Donald Trump said the war with Iran could end “very soon,” easing some market fears even as uncertainty around the conflict continues to fuel volatility in energy markets.

However, oil prices remain well above the levels recorded before the conflict between the United States, Israel, and Iran escalated earlier this year.

At the same time, the world’s largest oil exporter, Saudi Aramco, warned that prolonged disruption to energy supplies could have “catastrophic consequences” for global oil markets if shipping through the critical Strait of Hormuz does not resume soon.

Oil prices fall sharply

Brent crude, the global benchmark, dropped 11.28% to settle at $87.80 per barrel, while West Texas Intermediate (WTI), the U.S. benchmark, fell 11.94% to $83.45 per barrel.

Despite the decline, prices remain significantly higher than before the conflict began on February 28, when the United States and Israel launched strikes against Iran. Before the escalation, Brent traded around $73 per barrel and WTI around $67.

Earlier on Monday, oil prices had surged past $100 per barrel for the first time since the Russian invasion of Ukraine, with Brent briefly approaching $120 per barrel.

Mixed signals from Washington

The sharp drop in prices followed comments from Trump during a phone interview with CBS in which he suggested the conflict could end soon.

“I think the war is very complete, pretty much,” Trump said.

However, hours later, U.S. Defense Secretary Pete Hegseth struck a more hardline tone during a briefing at the Pentagon, saying the war would not end until “the enemy is totally and decisively defeated.”

His remarks renewed fears that the conflict could drag on longer than investors initially expected.

Global energy leaders assess supply risks

The head of the International Energy Agency (IEA), Fatih Birol, said member countries would hold discussions to evaluate the stability of global energy supplies.

The meeting will determine whether emergency oil stockpiles should be released to stabilize markets.

Meanwhile, the Group of Seven (G7) major economies said they were prepared to support global energy markets if needed by releasing strategic reserves.

Analysts estimate that around 1 billion barrels of oil could potentially be released from strategic reserves worldwide, excluding those held by China and Canada.

Mohit Kumar, an analyst at the investment bank Jefferies, said such reserves could stabilize markets if the war lasts only a few weeks.

However, he warned that a prolonged conflict lasting months could overwhelm these reserves.

Strait of Hormuz disruption raises fears

Energy markets remain particularly sensitive to disruptions in the Strait of Hormuz, the narrow shipping channel that carries a significant portion of the Middle East’s oil exports to global markets.

Trump warned on Tuesday that the United States would retaliate strongly if Iran attempted to block the vital route.

In a post on Truth Social, he said the U.S. would strike Iran “TWENTY TIMES HARDER” if it tried to disrupt oil flows through the strait.

The White House has also indicated it may provide insurance and naval escorts for tankers traveling through the strategic waterway, although a detailed plan has yet to be announced.

Saudi Aramco warns of “catastrophic consequences”

Amin H. Nasser, CEO of Saudi Aramco, warned that the longer the disruption continues, the more severe the consequences will be for the global economy.

“There would be catastrophic consequences for the world’s oil markets the longer the disruption goes on,” Nasser said after the company released its annual earnings report.

He added that the crisis is the largest disruption the region’s oil and gas industry has faced in recent years, noting that global oil inventories are currently at a five-year low.

Several Middle Eastern producers, including Saudi Arabia and Kuwait, have already begun cutting production as storage tanks fill up and export routes remain uncertain.

However, Nasser said Aramco could quickly restore output once shipping routes reopen.

“We can ramp up in days and not weeks,” he told analysts.