Oil prices fell approximately 2 percent on Tuesday, reaching fresh two-month lows. The decline followed statements from US officials suggesting that additional military action against Iran is not currently necessary, which eased investor fears regarding further supply disruptions in the Middle East.
At 10:28 a.m. ET (1528 GMT) on Tuesday, Brent futures dropped USD1.93, or 2.1 percent, to USD90.64 a barrel. US West Texas Intermediate (WTI) crude fell USD1.44, or 1.7 percent, to USD85.41. These figures placed both benchmarks on track for their lowest closes since August 28. This follows Monday's close, where both contracts hit their lowest levels since August 31.
US Secretary of State Marco Rubio stated on Tuesday during a meeting in Paris with foreign ministers from the G7 and the European Union that he informed G7 allies that US economic sanctions and a naval blockade are working so well that President Donald Trump does not need to conduct major combat operations in Iran.
On Monday, President Trump announced plans to hold off on new military strikes against Iran for the time being. This decision came after appeals from regional countries, including the prime minister of Qatar, during White House talks. Trump also indicated in a Reuters interview and a White House press briefing that he intends to maintain the naval blockade in the Strait of Hormuz for now.
Tim Waterer, chief market analyst at KCM Trade, noted that the market is prioritizing President Trump’s more conciliatory tone toward Iran since the midterms. During last week’s US midterm elections, voters focused on the rising cost of living, which was fueled by Trump’s trade tariffs and higher energy costs from the war with Iran. The Democratic Party secured solid majorities in both houses of Congress.
The conflict began in February when the US and Israel started attacking Iran. Before this, roughly 20 percent of the world’s oil supplies passed through the Strait of Hormuz. While Trump has downplayed the likelihood of major warfare restarting soon after more than eight months of conflict, he remains unwilling to accept an existing Iranian truce plan. Senior US and Gulf officials have expressed doubt regarding the possibility of an imminent deal.
