Global crude prices plunged on Tuesday reflecting hopes of reduced military escalations after US President Donald Trump signalled he would hold back on fresh strikes against Iran. Benchmark Brent crude slipped to $91.63 a barrel after an overnight plunge of $6.07, while US benchmark WTI fell to $86.04.
The drop follows a sharp sell-off on Monday. Brent settled 5.85% lower in that session, touching its weakest level since August 31. The benchmark has now shed 22% from its recent high of $118 a barrel, reached at the end of October.
Traders are reacting to diplomacy. Reports suggested the US was open to letting Iran enrich uranium to nearly 4%, though neither side has confirmed this. Trump’s softer stance has raised hopes for negotiations, but the Strait of Hormuz blockade remains in place. Tehran, meanwhile, has publicly rejected the premise that the war is over, so prices are moving on statements rather than on actual supply.
Supply is adding to the pressure. Higher OPEC output and a lower risk of new US strikes are keeping prices under pressure, and analysts say WTI could test $78 while Brent may slide towards $80 if it stays below $95.
Despite the fall, crude is still far above the pre war pricing.
For India, which hesvily depends on oil imports,cheaper crude could ease pressure on the import bill and the rupee. Any collapse in the talks could send prices back up quickly.