Oil Drops to $86 as Trump Reports Gulf Backing for Iran Blockade

West Texas Intermediate crude fell to $86.37 a barrel on Tuesday, extending the recent slide in oil prices. US President Donald Trump stated on Monday that Gulf nations prefer to maintain the blockade of Iran rather than launch fresh military strikes.

The blockade prevents Iranian crude from reaching global markets. Despite this, traders are factoring in a reduced likelihood of further military action. That could lower import expenses for Asian economies that rely on oil imports, including South Korea and Japan.

Why Is Oil Falling While the Blockade Stays?

Trump met with Qatar’s prime minister, Sheikh Mohammed bin Abdulrahman Al Thani, on Monday. He subsequently posted that Qatar, Saudi Arabia, the United Arab Emirates, Bahrain, and Kuwait support the current arrangement. That includes the naval blockade along with Operation Iron Gate.

Iron Gate is a task force of roughly 20 personnel based at US Central Command (CENTCOM). It was established on Saturday with the aim of disrupting weapons shipments across Iran’s land borders and the Caspian Sea.

“We are seeing positive momentum toward an end to this Conflict”

Donald Trump, US President, in a post on Truth Social.

Brent crude moved toward $94 on Monday, marking its lowest level since August 31, according to Trading Economics. That deepened a 13.3% weekly loss.

Following the Democrats’ victory in Congress, Brent and WTI each declined by about 13% last week in what oilprice.com described as a post-midterm oil drop.

Can Peace Hopes Hold Against Tanker Attacks?

On Sunday, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported fires on three tankers in the Strait of Hormuz. Iran-aligned Houthi rebels also struck Saudi Aramco offices in Riyadh, according to Trading Economics.

Qatar denied the reported $8 billion deal under which Iran would surrender control of the strait.

Secretary of State Marco Rubio stated that Tehran’s conditions are unrealistic and that negotiations have been fruitless. Iran’s foreign ministry said Washington must remove sanctions and the blockade before any talks can start.

A lower probability of military action is pulling prices down. However, a blockade that CENTCOM says has prevented more than $25 billion of Iranian crude exports continues to constrain supply.