Oil prices fall to lowest since August as Trump says Iran war is 'effectively over'

Oil prices dropped to their lowest level since August after Trump said the war with Iran is "effectively over", easing fears of a prolonged supply disruption that had pushed crude higher in recent months.

The decline marks a shift in sentiment for energy markets, which had priced in the risk of sustained conflict affecting production and shipping routes in the region. With Trump signalling that hostilities are winding down, traders moved to unwind positions built up in crude benchmarks, sending prices to levels last seen in August.

The move underscores how sensitive oil markets remain to developments in the Middle East, where any escalation or de-escalation in tensions can quickly translate into price swings. For investors, the retreat in crude prices offers relief on the inflation outlook but weighs on energy sector earnings, particularly for producers whose margins are tied to benchmark prices.

Lower oil prices could also feed through to consumer energy costs and transport expenses if the decline is sustained, though markets will be watching closely for confirmation that the de-escalation holds. The reaction in crude markets suggests traders are treating the statement as a meaningful shift in the risk outlook rather than a temporary pause.

Attention now turns to whether the easing of tensions is reflected in physical supply flows and whether Opec and its allies respond to the price decline. For now, the fall to August lows signals that the market is rapidly repricing the likelihood of further disruption.