Trump's Iran Policy Shift Sends Oil Prices Lower

Oil prices pulled lower on Tuesday morning after reports that President Donald Trump is considering ending the US military campaign against Iran. The Wall Street Journal reported on Monday that administration officials said the president was weighing an end to the conflict, which has kept the Strait of Hormuz largely shut.

This key energy shipping passage remains a crucial concern for markets, with Brent crude futures falling 0.6% to around $106.80 per barrel. West Texas Intermediate (CL=F) dipped 0.5% to $102.36 per barrel.

Even at this level, prices remain 'painfully high' for economies to deal with, according to Susannah Streeter, chief investment strategist at Wealth Club. Asian countries reliant on energy imports are bracing for prolonged disruption.

As consumers prepare for higher prices, central banks will be watching inflation expectations closely for signs that they'll demand higher wages to compensate, Streeter said.