Crude oil prices fall following Trump's statement on war with Iran

US President Donald Trump has stated that the war against Iran has 'effectively ended', causing crude oil prices to crash to their lowest levels since the end of August. According to a report by The Guardian, stock markets witnessed a surge as soon as this relief news entered the market.

On Tuesday morning, the global oil benchmark Brent crude recorded a decline of approximately 3%, reaching 89.66 dollars, the lowest price since 31 August. This drop follows a decline of nearly 6% recorded on Monday, which indicated signs of the conflict's end. President Trump dismissed the need for military action against Iran at this time.

During a press conference held at the White House, Trump told reporters, "At this time, taking military action does not seem to be a very necessary matter - but we are fully prepared and ready to move forward for any reason." He further added that Israel and the Gulf partner countries in this region are well secured against Iran, so there is no need to escalate tensions.

The decline in oil prices had a direct impact on the stock market. Europe's benchmark STOXX 600 index rose by 0.9% to reach 662.54, close to the record high levels reached in early August on hopes of a peace agreement in the Middle East. In London, the FTSE 100 index rose by 45 points or 0.4% to reach 10,828. However, oil companies BP and Shell were the biggest losers, with their prices falling by 1.7% and 1.5% respectively.

Airline shares also rallied in the hope that reduced tensions would lead to a decrease in fuel costs. Lufthansa rose by 1.8% and Air France-KLM by 1.2%. Daniela Hawthorne, senior market analyst at trading platform Capital.com, stated that global markets are seeing a recovery due to a strong Wall Street session, a sharp decline in oil prices, and fresh buying in technology stocks.

Hawthorne further added that despite the improvement in the geopolitical outlook, macroeconomic and corporate risks have not yet been resolved. She said that lower energy prices could help reduce inflation expectations, but the US Federal Reserve will seek broad evidence of disinflation before reconsidering its policy. Investors will be keeping an eye on the US inflation data for October, which will be released at 1.30 pm GMT.

Ordinary citizens and drivers hope that the decrease in wholesale oil prices will also be reflected in pump prices. According to AA, the average price of petrol in the UK has decreased by 5 pence per litre to 169.7 pence since the beginning of October, and wholesale market signals suggest a further decrease of 10 pence in the near future.