Market News

Oil prices plunged on Tuesday after US president Donald Trump predicted the war in the Middle East could be over “soon”, reversing a surge that had pushed Brent crude to its highest level in more than three years.

Brent crude fell as much as 10 per cent to below $90 (£67.50) a barrel in early Asian trading on Tuesday, after hitting a session high of $119.50 on Monday – its highest since mid-2022.

US West Texas Intermediate dropped to $88.65 (£66.49), down 6.5 per cent on the day.

The drop came after Mr Trump told CBS that the war against Iran was “very complete” and that Washington was “very far ahead” of his initial four-to-five-week timeframe.

Iran’s Revolutionary Guards pushed back, saying Tehran, not Washington, would “determine the end of the war” and that it would not allow “one litre of oil” to leave the region if US and Israeli attacks continued.

Mr Trump later warned on Truth Social that Iran would be hit “20 times harder” if it moved to block oil shipments through the Strait of Hormuz, which handles one-fifth of the world’s oil supply.

Prices had already begun retreating after Russian president Vladimir Putin held a call with Mr Trump and shared proposals aimed at a quick settlement to the war, according to a Kremlin aide.

Mr Trump also said Washington would waive oil-related sanctions on “some countries” – a move that could open the door to further easing of restrictions on Russian crude – after his call with Mr Putin.

The restrictions on oil flows in the Middle East have seen India and China, two of the biggest energy consumers, ramping up their Russian oil purchases. The US has said it will “allow” such purchases to be made sanction-free for up to 30 days.

Asian markets rallied sharply on Tuesday morning. Japan’s Nikkei 225 jumped 3.6 per cent and South Korea’s Kospi surged 6.4 per cent, prompting the Korea Exchange to trigger a trading curb after futures rose more than 5 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.6 per cent. Indian benchmarks were also eyeing recovery.

It followed one of the most volatile sessions in recent memory on Monday, when oil surged as much as 29 per cent during intraday trading before pulling back, stock markets plunged and then rebounded, and bond yields spiked on inflation fears before retreating.

“While all of this has helped ease some of the short-term panic, it’s hard to reconcile the idea of the conflict being ‘very complete’,” Tony Sycamore, a market analyst at IG in Sydney, told Reuters on Tuesday. He predicted crude could trade in a wide range of roughly $75 (£56.25) to $105 (£78.75) in the sessions ahead as volatility persists.