Oil Price Slips Below $90 as Trump's Statements Boost Expectations of De-escalation with Iran

Oil prices fell on Tuesday after US President Donald Trump signaled that new military strikes against Iran are not necessary. The statements reinforced expectations of a de-escalation of tensions in the Middle East and increased pressure on oil prices.

Brent futures dropped 2.8% to $89.95 per barrel, the first time the price has fallen below $90 since August. US West Texas Intermediate (WTI) fell 2.6% to $84.56 per barrel.

Trump expects war with Iran to end soon

At a press conference held at the White House, Trump stated that he expects the war with Iran to end "pretty soon." At the same time, he noted that the naval blockade imposed against Iran will largely remain in place. The president assessed that, from a military standpoint, the conflict is "effectively over."

These statements followed Trump's Monday meeting with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani, during which the parties discussed the possibility of reaching an agreement with Iran.

Qatar is considered one of the key mediators between Washington and Tehran, although recent attempts to reach a peace agreement have largely been unsuccessful.

At the same time, Iranian officials deny that direct talks with the US are underway. Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, wrote on social media that Washington "must stop spreading false information about imaginary negotiations."

Oil shipments through the Strait of Hormuz show signs of recovery

The ongoing conflict in the Middle East, now in its ninth month, has significantly disrupted oil supplies from the region. The Strait of Hormuz — one of the most critical maritime routes, through which roughly a fifth of the world's oil and liquefied natural gas passed before the joint US-Israeli attack on Iran — has been particularly affected.

However, recently published shipping data indicates that tanker traffic through the strait is recovering, a process partly supported by security measures provided by US military forces.

In addition, there are signs of growth in global oil production. According to a Reuters survey based on data from the Organization of the Petroleum Exporting Countries (OPEC), the group's member states' oil output in October reached approximately 90% of pre-conflict levels with Iran.

According to the survey, OPEC production rose by 1.38 million barrels per day in October, reaching 22.87 million barrels per day.

Supply is normalizing, but shipping remains difficult

According to ING analysts, the oil market has been characterized by sharp volatility throughout the year amid developments in the Middle East. Although an agreement between the US and Iran has not yet been reached, oil supply from the region is approaching pre-war levels by the end of the year.

However, analysts emphasize that the recovery in supply is not proceeding under normal conditions. In their assessment, oil shipping routes remain inefficient, which is reflected in a sharp rise in tanker freight rates.

Accordingly, despite the decline in oil prices, uncertainty in the market remains high. The further trajectory of prices will largely depend on the prospects for negotiations between the US and Iran, the security situation in the Strait of Hormuz, and the stability of oil supply from the region.