Washington: Oil prices slipped below the $90 per barrel mark following comments from US President Donald Trump, who declared that the conflict with Iran is "very complete, pretty much," and subsequent signals from the Group of Seven (G7) energy ministers regarding potential release of strategic crude reserves to mitigate supply disruptions.
According to Anadolu Agency, Brent crude experienced a 4.2% decrease, trading at $87.2 per barrel on Monday evening, after having previously surged to $119.50. This surge marked the first instance of oil prices exceeding $100 per barrel since Russia's invasion of Ukraine in 2022. Meanwhile, the US benchmark West Texas Intermediate (WTI) crude fell by 3% to $88.3 per barrel, after reaching a high of $119 overnight.
The initial increase in oil prices was attributed to production cuts by Gulf Arab countries, as the Strait of Hormuz remains closed due to security threats from Iran, which have disrupted crude shipments. However, the prices took a downward turn following President Trump's interview with CBS News, where he conveyed that the war with Iran is nearing its conclusion. He elaborated that Iran's military capabilities have been significantly diminished, mentioning the lack of naval power, communication infrastructure, air force, and missile capabilities.
Furthermore, President Trump highlighted that ships are now navigating through the Strait of Hormuz, and he is contemplating taking control of the strategic waterway. In parallel, G7 finance ministers held a virtual meeting to discuss the repercussions of the Iran conflict on global energy markets, expressing their willingness to stabilize these markets, including the possibility of releasing energy stockpiles.
President Trump also took to Truth Social to state that the elevated oil prices were a minor consequence for addressing Iran's nuclear threat, suggesting that only "fools" would disagree with this perspective. Meanwhile, Gulf Arab producers have scaled back their output, leading to crude accumulation in storage facilities due to the Strait of Hormuz's closure, as oil tankers avoid the route amidst concerns of potential Iranian attacks.