Oil prices inched higher on Wednesday after slumping below $90 per barrel for the first time since August this year following US President Donald Trump’s statement that he believes the war in Iran “is effectively over.”

Brent crude futures rose near $92 per barrel, while US West Texas Intermediate (WTI) crude futures increased to over $86 per barrel on Wednesday morning.

Trump says Iran war is over

“Iran militarily is effectively over. We are just keeping it the status quo,” Trump said on Monday after meeting with Qatar’s prime minister. The US President added that Iran has been “decapitated” but he is still looking to make sure there is a long-term solution to ensuring that Iran’s nuclear programme is defanged. “The military action doesn’t seem to be a very necessary thing, but we are locked and loaded, ready to go for any reason that changes,” Trump said.

This came a day after Trump said that the US could avoid another round of military action against Iran, only if the latter agreed to what he described as a strong deal. “It depends on whether or not they sign a very strong agreement. The answer is, highly unlikely it’s going to be necessary,” Trump told CNN during a phone interview. He repeated five times that renewed military intervention was unlikely if Iran made tangible progress in discussions over its nuclear programme and the reopening of the Strait of Hormuz.

Is the Iran war actually over?

While Trump’s comments this week boosted hopes for a resolution to the Middle East conflict, many are of the opinion that it may be too early to count on an announcement by someone whose frequent change of stance is only too well known. Meanwhile, the American naval blockade or Iran remains firmly in place. Iranian oil exports are still under as much pressure as any time in the recent past. A new US task force called the Iron Gate is being deployed with a mandate to restrict Iran’s overland trade.

According to recent US Centcom estimates cited by AP, Iran has been stopped from exporting more than $25 billion worth of crude. This means the Iran war is not a simple, straightforward military campaign anymore, but an economic war with high costs for the besieged side, Reuters and AP reported.

Also read | Trump’s Iran war may be ‘militarily’ over, but economic siege still haunts

What lies ahead for oil prices?

Goldman Sachs recently raised its oil price forecasts, citing increasing risks to global supplies. The investment bank warned that Brent crude could climb to $140 per barrel in 2027 if oil production across the Gulf region remains significantly below its 2025 average.

The bank raised its December Brent crude forecast to $105 per barrel from $90 earlier. Its forecast for US West Texas Intermediate (WTI) crude was also increased to $94 per barrel from $81.

In an upside scenario, Brent crude could reach $140 per barrel and average around $130 in 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average, Reuters reported, citing Goldman Sachs’ projections.

Goldman Sachs expects oil markets to incorporate a higher geopolitical risk premium, given the possibility of disruptions to Middle Eastern supplies, the historical duration of major supply shocks and the challenges involved in securing a lasting diplomatic breakthrough.

JPMorgan analysts also highlighted the uncertainty surrounding the conflict, saying it remained difficult to predict how the war would unfold. At the outset, the bank had expected the US administration to avoid crossing certain economic thresholds. However, seven months into the conflict, several of those thresholds have been breached, while a clear strategy to bring the war to an end has yet to emerge.

Also read |India in a ‘sweet spot’ amid oil volatility and currency dynamics: Kotak Neo’s Anindya Banerjee

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