Oil prices tumbled to their lowest level since late August on Tuesday after US President Donald Trump said the war with Iran was “effectively over” and predicted it would end “fairly soon”, though Iran’s top security official rejected reports of planned talks and an energy consultancy chairman said he still saw no prospect of a peace deal.
Brent crude fell nearly 3% to $89.66 a barrel, the lowest since 31 August, extending a near 6% drop on Monday that followed Trump’s comments at a White House press conference. The US benchmark WTI crude was down 2.4% at $84.78. Brent has fallen by almost $30 a barrel since the US midterm elections, after peaking at $130 in March and April as military strikes escalated.
Trump, speaking after meeting Qatar’s prime minister, a key mediator, said Israel and Gulf allies in the region were well protected from Iran and said further strikes were “quite unlikely” but insisted the US remained “locked and loaded, ready to go for any reason”. He said Gulf states preferred the status quo, including a naval blockade, over strikes. Trump said, “We are seeing positive momentum toward an end to this conflict, and will ensure that America’s interests are at all times protected.”
Qatar’s Prime Minister Al Thani described his meeting with Trump and Vice President JD Vance as “excellent”, saying they discussed ways to advance negotiations between the United States and Iran.
Tehran pushed back. Secretary of Iran’s Supreme National Security Council Mohsen Rezaei wrote on X that the US “flails like a desperate gambler”, telling Washington to “fold your hand. Stop manufacturing fake news about imaginary talks.” Iran’s Foreign Minister Abbas Araghchi denied any meeting between Vance and Rezaei was being planned, after media outlets reported it citing Turkey’s intelligence service chief. Iran’s top negotiator Mahammad Bagher Ghalibaf claimed on X that Israel was pushing the US deeper into conflict and that “unless Washington drops the ‘Israel First’ mindset, America and its allies are headed straight for a dark age.”
On the ground, Iranian authorities said strikes continued, with the Iranian island of Qeshm in the Strait of Hormuz targeted overnight, the provincial deputy governor stated on state television. The US military has not publicly acknowledged the strikes.
Fereidun Fesharaki, chairman of energy consultancy FGE, told CNBC that despite market moves he still did not see any prospects of a peace deal, saying the difference between the two sides was so wide it could not be bridged. He said the US wanted all enriched nuclear material transferred out of Iran, which he argued the Iranian regime would never agree to, and that Iran would not allow the Strait of Hormuz to be open for the free flow of oil as it was before the war.
ING strategists said in a note that the market had continued to unwind geopolitical risk premium built into prices in recent weeks as expectations grew that the conflict could move towards de-escalation. They said signs that regional oil flows were recovering had added to the downward pressure, but that with regional negotiations still uncertain and infrastructure risks persisting, oil prices would remain sensitive to developments in the Middle East.
European stock markets climbed, with the Stoxx 600 gaining 0.9%, while airline stocks rose on hopes that easing tensions could lead to lower fuel costs. In London, BP and Shell shares fell 1.7% and 1.5% respectively.
The average US gasoline price dipped below $4 a gallon for the first time since July, though diesel remained stubbornly high at $6.15 a gallon nationally. The AA said the average UK petrol price had fallen 5p a litre since early October, to 169.7p a litre, and that wholesale markets indicated another 10p reduction should be on the way.
Analysis
Why This Matters
- Oil prices have a direct impact on household costs: fuel, heating and the price of goods. A sustained fall would ease inflation pressures and give central banks room to cut interest rates.
- The Strait of Hormuz is a chokepoint for about a fifth of global oil supply. Any return to normal flows would relieve supply constraints that have kept prices volatile and boosted revenues for Iran’s adversaries.
- The conflict has been a political liability for Trump ahead of the next US election cycle. A resolution could reshape the domestic political landscape and the US posture in the Middle East.
Background
The US-Iran war began in early 2026, escalating from a series of naval incidents in the Strait of Hormuz into a full military campaign involving strikes on Iranian infrastructure and a naval blockade. The conflict pushed Brent crude from around $60 a barrel at the start of the year to a peak of $130. Iran has attacked at least 16 tankers in the Strait of Hormuz this month alone. Trump has described the US operation as “the largest naval blockade in history”. Houthi rebels in Yemen, allied with Iran, have also targeted Saudi energy infrastructure and airports. The war was a significant issue in the US midterm elections, which saw the Republican Party suffer heavy losses.
Key Perspectives
Donald Trump: Says the war is “effectively over”, that further strikes are “quite unlikely”, and that there is “positive momentum toward an end to this conflict”. He has said Gulf states prefer the status quo of a blockade.
Mohsen Rezaei (Iran’s security chief): Accused the US of “manufacturing fake news about imaginary talks” and told Washington to “fold your hand”.
Mahammad Bagher Ghalibaf (Iran’s top negotiator): Argued that Israel was pushing the US deeper into conflict and that unless Washington drops an “Israel First” mindset, America and its allies are headed for a “dark age”.
Iran’s Foreign Ministry: Denied any planned meeting between Vance and Rezaei, and stated via Tasnim news agency that Iran’s negotiating position has not changed and that it would not hold talks until Washington takes concrete steps under Iran’s seven conditions.
Fereidun Fesharaki (FGE chairman): Said he sees no prospect of a peace deal because the differences between the two sides are too wide to be bridged, particularly on nuclear material and control of the Strait of Hormuz.
ING strategists: Noted the market is unwinding geopolitical risk but said oil prices remain sensitive to Middle Eastern developments given persisting infrastructure risks and uncertain negotiations.
What to Watch
- Whether Iranian officials engage in any direct or indirect talks with the US, despite their current denials. Reports that Qatar may host a meeting between Vance and Rezaei next week will be closely watched.
- The trajectory of freight rates from the Persian Gulf: if chartering costs remain high, it would signal the market does not fully believe the conflict is ending.
- US inflation data for October, due alongside the oil price moves, which could temper or amplify the market’s relief rally depending on whether the Federal Reserve sees evidence of broader disinflation.
Checked
12 claims in this story checked against 4 sources: 11 supported.
Show each claim
- Partly supportedTrump said the Iran war was “effectively over”.Euronews: “"Iran, militarily, is effectively over. We're just keeping it the status quo," Trump told reporters Monday at a White House press briefing.”
- SupportedBrent fell nearly 3% to $89.66 a barrel, its lowest level since 31 August.World news | The Guardian: “Brent crude, the global oil benchmark, fell nearly 3% to $89.66, the lowest since 31 August, on Tuesday morning”
- SupportedMarkets were pricing in a move towards de-escalation.US Top News and Analysis: “The market has continued to unwind some of the geopolitical risk premium built into prices in recent weeks as expectations grow that the conflict between the US and Iran could move towards de-escalation”
- SupportedIran’s foreign minister denied that a meeting between Vance and Rezaei was planned, after media reports citing Turkey’s intelligence chief.Euronews: “Media outlets reported on Monday, citing Turkey's intelligence service chief Ibrahim Kalin, that Qatar would host a meeting between Vance and Rezaei next week. Kalin described it as an important opportunity for a breakthrough in the talks. Iran's Foreign Minister Abbas Araghchi denied any such meeting was being planned.”
- SupportedFGE chairman Fereidun Fesharaki said he saw no prospects of a peace deal.US Top News and Analysis: “Fereidun Fesharaki, chairman of energy consultancy FGE, told CNBC's "Squawk Box Asia" on Tuesday that, despite market moves, he still did not see any prospects of a peace deal between the U.S. and Iran.”
- SupportedOil prices had fallen almost $30 a barrel since the US midterm elections.Oilprice.com: “Crude oil prices have plunged by almost $30 per barrel since the US midterm elections”
- SupportedBrent peaked at $130 in March and April as military strikes escalated.US Top News and Analysis: “Brent Crude started the year around $60 a barrel before soaring as high as $130 a barrel as military strikes escalated in March and April.”
- SupportedWTI was down 2.4% at $84.78 a barrel.US Top News and Analysis: “U.S. WTI Crude was down 2.4% at $84.78 a barrel.”
- SupportedTrump said, “We are seeing positive momentum toward an end to this conflict, and will ensure that America’s interests are at all times protected.”Euronews: “"We are seeing positive momentum toward an end to this conflict, and will ensure that America's interests are at all times protected," Trump said.”
- SupportedMohsen Rezaei wrote on X that the US “flails like a desperate gambler” and told Washington to “fold your hand. Stop manufacturing fake news about imaginary talks.”Euronews: “Secretary of Iran's Supreme National Security Council Mohsen Rezaei wrote on X late Monday that the US "flails like a desperate gambler," telling Washington to "fold your hand. Stop manufacturing fake news about imaginary talks."”
- SupportedIranian authorities said Qeshm was targeted overnight.Euronews: “The island of Qeshm, located in the Strait of Hormuz, was targeted overnight from Sunday to Monday, the provincial deputy governor stated on state television.”
- SupportedThe US military had not publicly acknowledged the strikes.Euronews: “On the ground in Iran, strikes, which have not been publicly acknowledged by the US military, are continuing, according to Iranian authorities.”
