Oil declines following Trump’s latest comments

Brent crude’s price has plunged below the $90/bbl mark after US President Donald Trump claimed that Washington has engaged in “good talks” with Tehran.

IMAGE: Oil storage facility. Getty Images

Speaking to reporters aboard the Air Force One, Trump claimed “there are very friendly negotiations going on,” with Iran, after both sides refrained from fire exchange for a third consecutive day.

“I think there's a good chance that something [resolution] could happen,” Trump said.

Trump’s remarks have fuelled optimism for a diplomatic breakthrough between Washington and Tehran, though both sides have made it clear they stand ready to resume hostilities at a moment's notice if talks break down.

Red Sea threat persists

Even though Brent crude’s price rally has eased, severe logistical bottlenecks continue to impact Middle East energy flows, with Red Sea security remaining precarious as Yemen’s Iran-aligned Houthi militants continue its blockade of the region.

“Oil prices continue to sell off with recent developments pointing towards further de-escalation. However, for now, there is still no pickup in Persian Gulf oil flows,” two analysts from ING Bank noted.

Vessel transit through the Bab al-Mandeb Strait fell drastically after the Houthis struck Saudi Arabian oil sites in Jizan and Yanbu ports, Reuters reported.

Situated on the Red Sea coast near the Yemeni border, Jizan hosts a 400,000 b/d refinery. Additionally, Riyadh is highly dependent on its 1,200 km East-West Pipeline, funnelling about 70% of its crude exports through the Red Sea terminal at Yanbu, to circumvent the Strait of Hormuz.

For now, the global oil market remains entirely at the mercy of geopolitics – any flare-up in the Middle East will rocket prices upward, while progress toward diplomacy will drag them further down, according to analysts.

By Aparupa Mazumder

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