NEW YORK: Oil prices slid about 2 percent to fresh two-month lows on Tuesday after US officials downplayed the need for additional military action against Iran, easing fears of additional Middle East supply disruptions.
Brent futures fell USD1.93, or 2.1 percent, to USD90.64 a barrel at 10:28 a.m. ET (1528 GMT), while US West Texas Intermediate (WTI) crude fell USD1.44, or 1.7, to USD85.41.
That put both crude benchmarks on track for their lowest closes since August 28. On Monday, both contracts closed at their lowest since August 31.
US Secretary of State Marco Rubio said on Tuesday that he told Group of Seven allies that the US economic sanctions and naval blockade are working so well that US President Donald Trump does not need to conduct major combat operations in Iran.
Rubio made the comments during a meeting in Paris of foreign ministers from the G7, which comprises Britain, Canada, France, Germany, Italy, Japan and the United States, as well as the European Union.
On Monday, Trump said he plans to hold off on new military strikes against Iran for the time being after appeals from countries in the region, including from Qatar’s prime minister in White House talks. “The market continues to prioritize President Trump’s more conciliatory tone toward Iran since the midterms,” said Tim Waterer, chief market analyst at KCM Trade.
In last week’s US midterm elections, voters focused on the rising cost of living, which was fueled by Republican Trump’s trade tariffs and higher energy costs from the war with Iran, and handed solid majorities in both houses of Congress to the Democratic Party.
Trump, in a Reuters interview and a later appearance in the White House press briefing room, said he plans to keep up a naval blockade in the Strait of Hormuz for now. Before the US and Israel started attacking Iran in February, about 20percent of the world’s oil supplies passed through the Strait of Hormuz. More than eight months into the conflict, Trump has played down the likelihood of major warfare restarting soon but remains unwilling to accept an existing Iranian truce plan. Senior US and Gulf officials have cast doubt on the chances of an imminent deal.
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