Oil prices fell for a second straight session on Tuesday as markets hoped the United States and Iran would reach a diplomatic solution to the dispute that has disrupted global energy supplies for eight months.
brent crude oil Although it fell 3% to $101.54 per barrel, west texas intermediate The stock fell 2.3% to $94.23. It fell after rumors that the US and Iran were making progress towards a deal.
Oil prices fell more than 7% on Monday after the U.S. and Iranian governments said they were open to talks toward a settlement. President Donald Trump told reporters that the Iranian government “wants a deal and there’s a chance it could happen.”
The market has priced in the risk of oil price increases following the US midterm elections, with oil prices rising more than 10% in October. The situation in the Middle East remains unstable, and the possibility that new fighting will break out remains high.
U.S. officials attacked Iran’s Qeshm Island on Monday, telling The Wall Street Journal that the United States has been conducting “limited strikes” against Iran in recent weeks.
The report, citing unnamed officials, said military operations against Iran were deliberately kept low profile to avoid suggesting plans for a significant escalation of fighting.
But despite these attacks, the Trump administration has also touted the possibility of a diplomatic solution to the conflict, with Vice President J.D. Vance telling CNN, “Both the president and I are very comfortable with the possibility of reaching a negotiated solution.”
U.S. Secretary of State Marco Rubio said Sunday that President Donald Trump wants to resolve the Iran war “diplomatically” and does not want to use military force.
Rising oil prices are contributing significantly to U.S. inflation and soaring gasoline prices, and are a cause for concern for President Trump ahead of the midterm elections.
Last week, two Federal Reserve presidents said interest rates needed to rise to rein in inflation. Higher interest rates generally suppress growth and increase costs for consumers, but they help reduce inflation.
— CNBC’s Priyanka Salve contributed to this report.
