Brent Falls to $89.66, Lowest Since August, as Trump Calls Iran War Over

Brent crude fell nearly 3% to $89.66 on Tuesday morning — its lowest level since 31 August — after US President Donald Trump said the war on Iran was "effectively over" and downplayed the need for military action.

The drop extends a near 6% slide on Monday, when markets first priced in signs the conflict was nearing an end. Stock markets moved the other way: Europe's benchmark Stoxx 600 gained 0.9% to 662.54, hovering near the record high it hit in early August on hopes for a Middle East peace deal.

In London, the FTSE 100 climbed 45 points, or 0.4%, to 10,828.

What did Trump actually say?

Speaking at a White House press conference, Trump said Israel and Gulf allies in the region were well protected from Iran and that escalation was not needed. He kept the door open, barely.

"At this point, taking the military action doesn't seem to be a very necessary thing — but we're locked and loaded, ready to go for any reason," he told reporters during the briefing.

The market read that as de-escalation. Oil traders sold; equity buyers stepped in.

Who won and who lost on the day?

Airlines led the gainers on hopes that easing tensions could bring lower fuel costs:

• Lufthansa rose 1.8%
• Air France-KLM rose 1.2%

The losers were the oil majors. In London, BP fell 1.7% and Shell fell 1.5% — the biggest decliners on the FTSE 100.

The pattern is straightforward: cheaper crude helps carriers and burns producers. The gap between those two trades is the cleanest read on where the market thinks the conflict is heading.

What did analysts make of it?

Daniela Hathorn, a senior market analyst at trading platform Capital.com, said the rally has room to run but the macro picture hasn't changed.

"Global markets are extending their recovery this morning after Wall Street recorded a strong session that was relatively broad-based, supported by a sharp decline in oil prices and renewed buying in technology stocks," she said.

She flagged one immediate test: US inflation data for October, due at 1.30pm GMT. The Federal Reserve will want more evidence of slowing inflation before it budges, she said.

"Ultimately, markets are benefiting from an improvement in the geopolitical outlook, but the underlying macroeconomic and corporate risks remain unresolved. Lower energy prices could help ease inflation expectations, but the Fed will need evidence of broader disinflation before reconsidering its policy stance," Hathorn added.

"The key question is whether today's inflation figures support the recovery or remind investors that resilient economic growth and persistent price pressures could keep borrowing costs elevated for longer. With technology valuations still sensitive to yields, another inflation surprise could quickly bring volatility back into focus."

That's the trade-off in one line: geopolitics eased, rates didn't.

Will drivers see cheaper petrol?

UK motorists are already catching the tailwind. The AA said on Monday that the average UK petrol price has fallen 5p a litre since early October, to 169.7p a litre — and wholesale markets point to more.

The motoring group said another 10p reduction should be on the way if wholesale declines keep feeding through to the pump.

That transmission matters beyond the forecourt. Cheaper petrol feeds directly into headline inflation, which is exactly the number the Fed — and the Bank of England — are watching. Today's October inflation print will show whether cheaper oil is already doing that work, or whether the relief rally is running ahead of the data.