Brent Crude prices plunged to below $90 per barrel early on Tuesday, falling below that threshold for the first time since August, as U.S. President Donald Trump again signaled potential de-escalation in the Middle East and no need for strikes against Iran.
As of early morning in Europe, the front-month Brent Crude futures had dropped to $89.70, and WTI Crude, the U.S. benchmark, traded below $85 per barrel, falling by over 2%.
At the start of Asian trading, Brent Crude had dipped below $92 per barrel, following reports citing President Trump as not planning to attack Iran “at this point”.
However, the Houthis continue to target Saudi energy infrastructure, with the latest attack once again on the East-West pipeline. According to an official from the Saudi energy ministry, the attack caused a “limited fire”, which was extinguished.
In morning trade in Europe on Tuesday, the market appears focused on the hopes that the latest diplomatic push in the Middle East, mediated by Qatar, could result in some form of an agreement.
At the start of this week, oil prices extended their steep sell-off from last week. Brent Crude prices tumbled by 17% last week, the single biggest weekly decline since the wild weeks in 2020 during the COVID pandemic.
Brent Crude prices have now fallen by about 25% from their late-October peak above $117 per barrel, as hopes for an end to the eight-month-old Middle East conflict have strengthened following the U.S. midterm elections, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said early on Tuesday.
“President Trump added to the optimism by suggesting further strikes on Iran would not be necessary. While crude oil flows have almost returned to pre-war levels, LNG and refined product supplies remain constrained, keeping prices elevated, particularly for diesel,” Hansen said.
Today, the market is likely to closely follow any fresh signals from Washington and Tehran on the prospects for a diplomatic breakthrough, the strategist said.
By Tsvetana Paraskova for Oilprice.com
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