Oil prices plummet after Trump's announcement

Oil prices plunge after Trump declares war over

World oil prices plummet after US President's statement Donald Trump about the possible end of the war with Iran.

The market saw a sharp drop in quotations, accompanied by high trading volumes. Traders started selling oil amid expectations of a de-escalation of the conflict in the Middle East.

The reason is geopolitics

The market reacted to Trump's statement about «very productive talks» between the US and Iran that could end the conflict.

A decrease in tension in the region automatically means:

• No risk of supply disruptions
• Stabilisation of the Strait of Hormuz
• Reducing the «war premium» in the price of oil

It was the geopolitical factor that used to keep prices high.

What this means for Ukraine

Falling oil prices directly affect the cost of fuel in Ukraine.

This is expected to happen in the near future:

• petrol may become cheaper
• diesel will also go down
• The fuel market stabilises

However, the rate of decline will depend on the exchange rate, logistics and traders' stocks.

Context.

In recent months, oil prices have been rising due to the escalation in the Middle East and the risks of a large-scale war between the US and Iran.

Any news of de-escalation traditionally causes a sharp drop in quotations, as the market prices in risk reduction.

What's next

Analysts say that if the talks do end in a deal, the oil market may enter a phase of steady decline.

This will be one of the key factors:

• for the global economy
• for inflation
• for energy costs