Oil Prices Retreat as Trump's Latest Iran Remarks Push WTI Down Over 2%, Brent Below $110

TradingKey - On October 26, international oil prices extended their decline from recent highs. WTI (USOIL) crude fell over 2% intraday, while Brent (UKOIL) crude dropped back below the $110 mark. After Middle East supply risks drove a rapid rally in oil prices last week, Trump's latest remarks on Iran and a new round of diplomatic mediation lowered market expectations of further short-term military escalation, prompting an unwinding of some risk premiums previously priced into oil.

WTI crude oil price daily chart, Source: TradingView

As of press time, WTI crude was trading around $100.80, down 2.50% on the day, while Brent crude fell to around $109.50, surrendering the $110 mark. Brent has pulled back significantly from Friday's closing price of $116.72. Brent gained more than 6% last week, while WTI rose 4.4%, with the rapid rally increasing short-term profit-taking pressure.

From a fundamental perspective, the current decline in oil prices is primarily linked to new signals of easing tensions between the US and Iran. Trump stated on Sunday that the US would not strike Iran that day. Meanwhile, Qatari mediators traveled to Tehran and coordinated with the US to de-escalate regional tensions. Markets had previously feared the US might expand military action against Iran, so these statements reduced expectations of worsening short-term supply disruptions.

Secondly, oil prices had previously surged rapidly, increasing the likelihood of a correction. News of Houthi attacks on Saudi facilities last week briefly pushed Brent to nearly a six-month high. As oil prices rose above $110, some traders began locking in profits. Market analysts noted that the current pullback reflects position adjustments and risk management rather than a significant improvement in actual Middle East supply conditions.

However, oil prices still find some downside support. The Houthis continued to claim attacks on Saudi airports and oil facilities over the weekend, while Saudi Arabia stated it intercepted additional missiles and drones. Furthermore, US commercial crude oil inventories fell by about 3.06 million barrels to 412.5 million barrels in the latest week, indicating that physical supply has not meaningfully eased.