Oil prices plunged on Tuesday, posting their largest single-day percentage decline since March 2022 as markets reacted to signals that the conflict with Iran could ease and that oil supplies may continue reaching global markets.
Brent crude futures settled at $87.80 per barrel, down $11.16, or 11%, while U.S. West Texas Intermediate (WTI) crude settled at $83.45, down $11.32, or 11.9%. The sharp drop came just one day after both benchmarks surged to four-year highs.
Prices fell after U.S. President Donald Trump predicted the war with Iran could end quickly, easing concerns about prolonged disruptions to global oil flows. The market decline accelerated after the U.S. Energy Secretary said the American military had successfully escorted an oil tanker through the Strait of Hormuz, signaling that shipments through the key shipping lane could resume.
The Strait of Hormuz normally handles roughly 20% of global oil supply, and fears of a prolonged closure had driven prices sharply higher earlier in the week.
Additional downward pressure came from reports that the Trump administration is considering easing sanctions on Russian oil and potentially releasing crude from strategic petroleum reserves in coordination with Group of Seven (G7) countries to help stabilize energy markets.
Despite the sharp selloff, analysts note that global supply risks remain elevated. Nearly 1.9 million barrels per day of refining capacity in the Gulf region has been shut in due to the conflict, and restarting wells and production infrastructure could take weeks even if the war ends soon.