Trump's Iran De-escalation Signal Sends Brent and WTI Tumbling 6%

Crude oil benchmarks fell sharply on Monday after President Donald Trump signaled a potential end to the U.S.-Israeli war with Iran, triggering a swift reversal from the prior session's three-year highs and wiping billions in geopolitical risk premium from global energy markets.

Front-month ICE Brent crude fell $6.53, or 6.6%, to $92.43 per barrel at 11:00 a.m. Singapore time, while April Nymex WTI dropped 6.3% to $88.78 per barrel, according to Argus Media. Both contracts had swung even lower in early Asian trading, with Brent touching $88.05 and WTI briefly hitting $84.43 before recovering. The declines came just one session after Brent and WTI surged to session highs near $119.50, their loftiest levels since mid-2022, as supply cuts by Saudi Arabia and other Gulf producers and fears of a prolonged Strait of Hormuz blockade sent traders into a panic.

The catalyst for the reversal was Trump himself. Speaking at a signing ceremony, Trump said the war "could be over soon" and declared he was "well ahead" of an internal four-to-five-week projected timeline, adding that Iran "fired everything it could fire." In a separate statement, Trump said: "We have been notified and pretty strongly... that the killing in Iran is stopping, and it's stopped and it's stopping, and there's no plan for executions or an execution or executions." Reuters also reported that Trump told reporters Iran was "seriously talking" with Washington, a characterization that aligned with comments from Tehran's top security official Ali Larijani, who said arrangements for negotiations were underway.

The shift was stark given that Trump had only the day before called off all meetings with Iranian officials and posted a social media message urging Iranians to "KEEP PROTESTING - TAKE OVER YOUR INSTITUTIONS!!!"

Traders had spent weeks pricing in catastrophic supply disruption. The Strait of Hormuz, through which roughly 20% of global oil flows, had been effectively closed by Iranian military actions, forcing Gulf producers to curtail output. Brent had gained 16% in January alone, with WTI rising 13%, following what Reuters described as the benchmarks' biggest monthly increase since 2022.

Trump's remarks drained that premium with unusual speed. "Taking the events of the past 24 hours into account, I expect crude oil to remain highly volatile, trading within a wide range between US$75-ish and US$105-ish in the sessions ahead," said Tony Sycamore, market analyst at IG. UBS analyst Giovanni Staunovo pointed to additional headwinds beyond diplomacy, noting that falling supply disruptions in the U.S. and Kazakhstan, alongside a stronger dollar, also weighed on prices.

The selloff extended beyond the crude complex. U.S. equities staged a sharp reversal, with the Dow and S&P 500 surging as energy costs fell, though shares in Exxon and Chevron actually gained as investors rotated into the sector for protection.

The diplomatic picture was further complicated by a call between Trump and Russian President Vladimir Putin, in which Putin shared proposals for a quick settlement to the Iran war, according to a Kremlin aide cited by the Business Times. Trump is also reported to be weighing a package of price-relief measures, including easing oil sanctions on Russia and releasing emergency crude stockpiles from the Strategic Petroleum Reserve.

The Pentagon announced plans to provide naval escorts for hundreds of ships stranded in the Mideast Gulf, though senior U.S. military commanders did not publicly confirm the escort operations and instead emphasized that the U.S. would "soon degrade Iran's capacity to launch missiles and drones at its neighbors," a signal that the conflict's resolution remains far from certain.