Oil drops sharply from three-year high as Trump hints at potential peace deal

Oil prices fell sharply on Tuesday after hitting a three-year high in the previous session, as US President Donald Trump suggested the war in the Middle East could end soon, easing fears of prolonged supply disruptions.

Brent crude dropped $6.75, or 6.8 per cent, to $92.21 a barrel, while US West Texas Intermediate (WTI) fell $6.41, or 6.8 per cent, to $88.36. Both contracts earlier slid as much as 11 per cent.

Volumes in Brent and WTI contracts fell to their lowest since late February. Prices had surged above $119 a barrel on Monday due to supply cuts by Saudi Arabia and other producers. Retreat followed after a call between Russian President Vladimir Putin and Trump, in which proposals for a quick settlement were reportedly discussed.

Analysts said markets overreacted to both the surge and the fall. Suvro Sarkar of DBS Bank noted that key Middle Eastern grades such as Murban and Dubai remain above $100 per barrel. Iran warned that continued attacks could halt regional oil exports.

Trump is also considering easing Russian oil sanctions and releasing US emergency reserves to curb prices, while G7 nations signalled readiness to act on rising global oil costs. Goldman Sachs maintained its year-end 2026 forecasts for Brent at $66 and WTI at $62 per barrel.

Attribution: Reuters