New Delhi: Oil prices eased on Wednesday after US President Donald Trump again asserted the war with Iran will end “very quickly”, though investors remained cautious about the outcome of peace talks amid continued disruptions to West Asian energy supply. Brent crude futures fell 45 cents, or 0.4%, to $110.83 a barrel, while US West Texas Intermediate futures were down 27 cents, or 0.3%, to $103.88.
Both benchmarks had fallen nearly $1 on Tuesday after US Vice President JD Vance said the US and Iran had made progress in talks, with neither side wanting to see a resumption of military action.
Why are investors still cautious despite Trump’s remarks
Despite Trump’s assertion about a quick end to the conflict, he earlier said the United States may need to strike Iran again and had been an hour away from ordering an attack before postponing it. Trump also said Iran’s leaders are “begging for a deal” and warned a new US attack would happen in coming days if no agreement was reached. “Investors are keen to gauge whether Washington and Tehran can actually find common ground and reach a peace agreement, with the US stance shifting daily,” said Toshitaka Tazawa, analyst at Fujitomi Securities, Reuters reported.
Oil prices likely to stay elevated
Citi on Tuesday said it expects Brent crude to rise to $120 a barrel in the near term, stating that oil markets are under-pricing the risk of a prolonged supply disruption and broader tail risks. The US-Israeli war against Iran has caused the effective closure of the Strait of Hormuz, which normally carries about a fifth of global oil supplies, creating the world’s biggest oil supply disruption, according to the International Energy Agency.