Oil Drops Below $90 After Trump Says the Iran War Is Nearly Over

The price of oil just slipped under $90 a barrel for the first time since August, and markets are giving the credit to one thing: President Trump saying the war with Iran is winding down.

Brent crude, the world’s benchmark price, fell nearly 3% Tuesday morning to $89.66, its lowest since Aug. 31, The Guardian reported. That came on top of a drop of nearly 6% on Monday. The U.S. price, known as WTI, fell to about $84.59, CNBC reported.

What Trump said

Speaking at the White House on Monday after talks with Qatar’s prime minister, Sheikh Mohammed bin Abdulrahman Al Thani, Trump said, “Iran militarily is effectively over.” He added: “We’re seeing momentum toward the end of this conflict. I think it’s going to be ending fairly soon.”

He also said new strikes weren’t needed “at this point,” while warning the U.S. remains “locked and loaded” if things change. The U.S. naval blockade of Iranian ports stays in place to protect Gulf partners, he said, adding, “We have some great allies there and we have to make sure they’re not hurt.”

Why prices are falling

It isn’t just words. Oil is moving again. Commodity analysts at ING said crude exports from the Persian Gulf are back to an estimated 80% to 85% of pre-war levels, The Independent reported, and reports that Iran may be softening its stance on the Strait of Hormuz have eased fears of a long shutdown of the world’s most important oil shipping lane.

Brent hit a six-month high of $118 on Oct. 30, 3News reported, after topping out near $130 in the spring, according to CNBC. Tuesday’s price is roughly 24% below that October high.

What it means at the pump

Cheaper crude usually shows up in gas prices with a lag of a few weeks. CNBC notes that a shortage of refining capacity has kept diesel, gasoline and jet fuel prices high, so drivers may not feel the full drop right away. Analysts also warn prices could jump again if talks with Iran break down.

For now, the trend is moving in the right direction, and it began the moment Trump signaled the fighting is ending.