Oil Prices Drop on Improved Supply Outlook, Brent Falls to $91
In the global commodity market, oil prices fell Tuesday as hopes that the US-Iran conflict could soon end eased lingering concerns about potential Middle East supply disruptions.
International benchmark Brent crude futures for January delivery fell about 1.5% to $91.18 a barrel, down from the previous close of $92.57.
US benchmark West Texas Intermediate (WTI) crude futures for December delivery dropped 1.6% to $85.44 a barrel, down from $86.85 at the previous close.
US President Donald Trump said Monday that further military action against Iran did not appear necessary at this stage, while warning that Washington remained prepared to act if the situation changed.
“At this point, taking the military action doesn’t seem to be a very necessary thing — but we’re locked and loaded, ready to go for any reason,” he told reporters at the White House.
Trump added that Israel and the wider Middle East were protected from the Iranian “danger and threat.”
“We’re seeing momentum toward the end of this conflict. I think it’s going to be ending fairly soon,” he said.
He said the US “is just keeping it the status quo.”
“I don’t guarantee anything, but if we do have to go back in, we are locked and loaded.”
Trump said he hoped the US would be able to reach a deal with Iran.
“But nothing’s going to happen. And if we have to, we’ll take it very serious. We are so loaded. We just have another aircraft carrier. It’s all loaded up to the gills with brand-new, beautiful stuff,” he added.
“And hopefully, we don’t have to use them.”
His remarks helped ease concerns over potential disruptions to oil shipments from the Middle East, putting downward pressure on crude prices.
Brent had already fallen more than 5% in the previous session.
However, uncertainty persisted after Mohsen Rezaei, secretary-general of Iran’s Supreme National Security Council, rejected Trump’s remarks and denied reports of ongoing talks with Washington.
Rezaei also called on the US to accept seven conditions Tehran previously set out.
Conflicting statements from Washington and Tehran, along with continued attacks on commercial vessels near the Strait of Hormuz, have kept concerns over regional oil supplies alive.
Meanwhile, investors are watching US-mediated talks between Russia and Ukraine, scheduled to begin Tuesday in Abu Dhabi, for signs of progress toward ending the conflict.
Markets are also awaiting the US Energy Information Administration’s (EIA) Short-Term Energy Outlook report later Tuesday for fresh forecasts on global oil supply, demand and prices.
