Oil prices fell sharply on Tuesday as hopes of a swift resolution to the conflict between the U.S. and Iran boosted market sentiment, though lingering supply concerns kept volatility high. The drop followed President Donald Trump’s public statements suggesting the war had reached a critical turning point, though analysts warned that the situation remains fragile. Brent crude futures dropped $11.16, or 11%, to $87.80 per barrel, while U.S. West Texas Intermediate (WTI) crude fell $11.32, or 11.9%, to $83.45 per barrel. Both benchmarks recorded their largest single-day percentage declines since March 2022, after earlier surging to four-year highs driven by OPEC+ production cuts. The sharp reversal came after Trump and Russian President Vladimir Putin reportedly discussed potential pathways to end the conflict, according to a Kremlin aide. Despite the optimism, experts cautioned that oil markets remain vulnerable to prolonged disruptions. Simon Flowers, chairman and chief analyst at Wood Mackenzie, noted that even if hostilities ceased, restoring full production capacity could take weeks or longer. “Cranking up the supply chain won’t be swift,” he said, highlighting the risks of delayed refinery operations and port logistics. Gregory Daco of EY-Parthenon added that extended conflicts could amplify economic shocks, particularly for energy-dependent sectors. The war has already triggered widespread cost increases across multiple industries. Diesel prices in the U.S. hit $4.65 per gallon, a 23% rise since the conflict began, driving up shipping expenses and freight costs. Natural gas prices in Europe surged 75% since the war started, raising heating and cooking costs while threatening to inflate prices for plastics, rubber, and nitrogen fertilizers.#president_donald_trump #russian_president_vladimir_putin #kremiin_aide #wood_mackenzie #ey_parthenon
