Oil Price Slides to $86 as Trump Says Gulf Allies Back Iran Blockade
Oil prices extended their slide on Tuesday, with West Texas Intermediate (WTI) crude at $86.37 a barrel. US President Donald Trump said on Monday that Gulf allies prefer keeping the blockade of Iran over renewed strikes.
The blockade keeps Iranian crude off the market. Even so, traders are pricing lower strike risk. That could ease import costs for oil-importing Asian economies such as South Korea and Japan.
Why Is Oil Falling While the Blockade Stays?
Trump held talks with Qatar’s prime minister, Sheikh Mohammed bin Abdulrahman Al Thani, on Monday. He then posted that Qatar, Saudi Arabia, the United Arab Emirates, Bahrain, and Kuwait favor the status quo. That means the naval blockade plus Operation Iron Gate.
Iron Gate is a task force of about 20 staff at US Central Command (CENTCOM). It was formed Saturday to disrupt weapons shipments across Iran’s land borders and the Caspian Sea.
“We are seeing positive momentum toward an end to this Conflict”
Donald Trump, US President, in a post on Truth Social.
Brent fell toward $94 on Monday, its lowest since August 31, according to Trading Economics. That extended a 13.3% weekly decline.
After Democrats won Congress, Brent and WTI each lost about 13% last week in a post-midterm oil drop, oilprice.com reported.
Can Peace Hopes Hold Against Tanker Attacks?
On Sunday, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported fires on three tankers in the Strait of Hormuz. Iran-backed Houthi rebels also damaged Saudi Aramco offices in Riyadh, according to Trading Economics.
Qatar denied the reported $8 billion deal under which Iran would cede control of the strait.
Secretary of State Marco Rubio said Tehran’s demands are unrealistic and talks have been unproductive. Iran’s foreign ministry says Washington must lift sanctions and the blockade before negotiations begin.
Lower strike risk pulls prices down. However, a blockade that CENTCOM says has stopped more than $25 billion of Iranian crude exports holds supply back.