Global oil markets experienced a sharp reversal on Tuesday as prices retreated after touching their highest levels in more than three years in the previous session. The pullback came after comments from U.S. President Donald Trump suggesting that the ongoing Middle East conflict involving Iran could reach a resolution sooner than expected, easing fears of sustained disruptions to global oil supply chains.

Brent crude futures dropped by $6.51, or about 6.6%, to $92.45 per barrel, while U.S. West Texas Intermediate (WTI) crude declined $6.12, or roughly 6.5%, to $88.65. The correction followed an extraordinary rally on Monday, when both benchmarks surged past the psychologically important $100 mark and briefly touched session highs near $119.5 per barrel the highest levels since mid-2022.

The sharp price spike earlier in the week was triggered by escalating geopolitical risks. Supply cuts from major producers, including Saudi Arabia and other regional exporters, coincided with an intensifying U.S.–Israeli military confrontation with Iran. Markets rapidly priced in the possibility that the conflict could disrupt crude flows from the Persian Gulf, one of the most critical energy corridors in the world.

However, sentiment shifted after reports emerged that Russian President Vladimir Putin held a conversation with Trump and shared proposals aimed at reaching a quick settlement to the Iran war. According to a Kremlin aide, the discussion focused on potential pathways to de-escalation. Markets interpreted this development as a sign that diplomatic channels might still prevent a prolonged supply shock.

Trump reinforced that view in a television interview, stating that the campaign against Iran appeared to be progressing faster than originally anticipated. He indicated that Washington was significantly ahead of the timeline he had earlier projected, which initially suggested a four- to five-week timeframe for major military operations.

Despite these remarks, geopolitical tensions remain far from resolved. Iran’s Revolutionary Guards responded with a strong warning, saying Tehran would determine how the conflict ends. The group also stated that Iran could block regional oil exports if U.S. and Israeli attacks continued, a move that could severely disrupt global energy flows. Such threats underscore the fragile nature of the current market balance.

Another factor weighing on prices was the possibility of policy intervention by Washington to cool the rally in crude. Reports indicated that the U.S. administration is considering easing sanctions on Russian oil exports and potentially releasing emergency crude stockpiles. These measures are part of a broader strategy aimed at preventing energy prices from surging to levels that could damage the global economy.

Energy analysts note that the past few days illustrate how quickly sentiment can swing in the oil market when geopolitical risk intersects with supply constraints. According to market commentary from IG analysts, crude could remain highly volatile in the near term, potentially trading in a wide band between roughly $75 and $105 per barrel as the geopolitical situation evolves.

Underlying supply disruptions are already emerging across the Gulf region. Iraq has reportedly cut production at its major southern oilfields by around 70%, reducing output to roughly 1.3 million barrels per day. Kuwait Petroleum Corporation has also begun scaling back production and declared force majeure on certain shipments due to logistical disruptions.

Saudi Arabia, one of the world’s largest oil exporters and a key swing producer in global markets, has also begun trimming output according to industry sources. While the exact scale of the reductions remains unclear, even modest adjustments from Saudi Arabia can have a disproportionate impact on global supply expectations.

The Group of Seven (G7) nations have acknowledged the growing risks posed by surging oil prices. While they stopped short of committing to an immediate release of strategic petroleum reserves, the bloc said it is prepared to take necessary measures to stabilize energy markets if price volatility intensifies.

For global markets, the developments highlight the increasing dominance of geopolitical risk in energy pricing. Even brief supply disruptions in the Middle East which accounts for nearly a third of global crude exports can trigger outsized price swings because spare production capacity worldwide remains limited.