Oil prices fall as Trump eases Iran tensions

Global oil prices declined for a second consecutive session on Tuesday as easing fears of a fresh military confrontation between the United States and Iran reduced concerns about prolonged disruptions to energy supplies from the Middle East.

Brent crude futures dropped 70 cents, or 0.75 per cent, to $91.88 per barrel by 0246 GMT. US West Texas Intermediate (WTI) crude fell 78 cents, or 0.90 per cent, to $86.07 per barrel. Both benchmarks had earlier recorded losses of around 1 per cent.

The decline followed a sharp fall in the previous session, when Brent crude settled 5.85 per cent lower after touching its weakest level since August 31.

Market sentiment improved after US President Donald Trump indicated that he would refrain from launching further military strikes against Iran for the time being. His decision followed appeals from several regional countries, including Qatar, whose prime minister discussed the situation during talks at the White House.

Trump said Washington would maintain its naval blockade in the Strait of Hormuz despite putting additional military action on hold.

The developments eased concerns that an escalation in the conflict could threaten oil shipments through the strategically important waterway, which handles a significant share of global energy trade.

KCM Trade chief market analyst Tim Waterer said investors were responding positively to Trump’s comparatively conciliatory approach towards Iran. He noted that although attacks on shipping around the Strait of Hormuz continued, they had not intensified enough to trigger fresh concerns over supply risks.

Meanwhile, oil production by members of the Organisation of the Petroleum Exporting Countries (OPEC) increased in October, according to a Reuters survey. Higher output from Saudi Arabia, Kuwait and Iraq contributed to the rise despite ongoing export restrictions.

Brent crude has fallen approximately 22 per cent from its six-month peak of $118 per barrel recorded on October 30. The retreat reflects reduced expectations of further US military action against Iran following the midterm elections.

However, concerns about the security of international shipping routes remain a major source of uncertainty for energy markets.

Eurasia Group senior analyst Gregory Brew said oil prices were unlikely to fall below $90 per barrel for Brent without more lasting signs of de-escalation and progress towards an agreement between Washington and Tehran.

He also warned that shipping risks remained elevated as Iran continued attacking vessels travelling through the Strait of Hormuz.

Separately, diplomatic efforts to end the Russia-Ukraine war were also expected to resume on Tuesday, with officials from both countries scheduled to participate in two days of US-mediated negotiations. The talks will be the first direct engagement of this kind since February.

Trump had expressed optimism last week that a broader peace agreement could be reached after more than four years of fighting, potentially addressing wider European security concerns.