Oil prices tumbled Tuesday as investors weighed comments from U.S. President Donald Trump about the war with Iran and the risk to oil flows through the critical Strait of Hormuz, CNBC reports.
Brent crude was down about 8% at roughly $91 per barrel as of 4:30 a.m. EST Tuesday, while U.S. crude fell about 8.1% to around $87 per barrel, retreating after prices surged past $100 a day earlier.
The sharp moves follow a dramatic rally Monday, when oil prices jumped about 20%, briefly hitting $119.50 amid fears the escalating U.S.-Israeli conflict with Iran could disrupt global energy supplies.
Saudi Aramco CEO Amin Nasser warned the conflict threatens severe repercussions for global energy markets.
Speaking on an earnings call, Nasser said the war has triggered “catastrophic consequences” for the oil market.
The conflict has already caused “a severe chain reaction” and “a drastic domino effect” affecting industries beyond shipping, including “aviation, agriculture, automotive, and other industries.”
“The longer the disruption goes on and the more drastic the consequences for the global economy,” he said, adding that the war is “by far the biggest crisis” faced by the region’s oil and gas industry.
Markets were also reacting to remarks from Trump, who earlier suggested the conflict could soon end but later issued a stark warning to Tehran over any attempt to block the Strait of Hormuz.
“If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far,” Trump wrote Monday on Truth Social.
The president added: “This is a gift from the United States of America to China, and all of those Nations that heavily use the Hormuz Strait. Hopefully, it is a gesture that will be greatly appreciated.”
Located between Oman and Iran, the Strait of Hormuz is the world’s most critical oil chokepoint, carrying roughly 13 million barrels per day in 2025 — about 31% of global seaborne oil flows, according to Kpler.
The passage links major Gulf producers including Saudi Arabia, Iran, Iraq and the United Arab Emirates to global markets.
Iran’s Foreign Ministry warned Monday that oil tankers traveling through the waterway “must be very careful.”
Trump told CBS News earlier in the day that ships were continuing to pass through the strait, adding he was “thinking about taking it over.”
At a press conference Monday, the president also said the war with Iran would end “very soon,” predicting oil prices would fall.
Analysts said Trump’s comments helped calm some fears about a prolonged disruption to energy supplies.
“I think there’s a lot of optimism in the market,” said Bob McNally, president of Rapidan Energy Group. “We saw that today with the collapse in oil prices on what we used to call verbal intervention from the President.”
Still, McNally said traders are struggling to process the scale of the disruption.
For decades, the market assumed no country would ever shut the Strait of Hormuz — the world’s most critical oil chokepoint.
The fact that it has occurred at all is “completely calamitous and unexpected,” he said, noting that even during tensions in the 1980s the waterway was never fully closed.
For now, markets appear to be betting the disruption will be temporary and that navigation through the strait will ultimately resume.
Others urged caution.
“We will have to wait and see how Iran responds to the President’s comments and whether or not Iran will attack any oil infrastructure in the coming hours,” said Andy Lipow, president of Lipow Oil Associates.
Meanwhile, G7 energy ministers are set to hold a virtual meeting Tuesday to discuss a possible release of emergency oil reserves to stabilize global markets.
Officials are weighing a coordinated release of 300 million to 400 million barrels, roughly 25% to 30% of the group’s combined 1.2 billion barrels of reserves, according to sources familiar with the talks.
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