Oil and gas prices dropped sharply overnight after US president Donald Trump suggested sanctions on crude exports could be lifted to boost global supply.
Brent crude, the international benchmark, fell by as much as 11% to around $88 a barrel after a volatile start to the week that briefly saw prices approach $120.
The decline followed comments from Mr Trump indicating the conflict in the Middle East could soon end.
“We’re also waiving certain oil-related sanctions to reduce prices,” he said.
The remarks came after a lengthy phone call between the US president and Russian leader Vladimir Putin, during which the Kremlin said several proposals were put forward aimed at ending the war quickly.
Oil markets had already begun easing earlier in the week after Mr Trump suggested the war in Iran was “very complete”.
However, Iran’s Revolutionary Guards struck a defiant tone, signalling that hostilities may continue. Spokesperson Ali Mohammad Naini said Iran would decide when the conflict ends, stating: “Iran will determine when the war ends.”
UK wholesale gas prices fell more than 10% when markets opened this morning, dropping to around 123p per therm. That represents a sharp fall from the intraday peak of 171p reached on Monday.
Despite the recent spike, prices remain far below the record levels seen during the energy crisis following Russia’s invasion of Ukraine, when gas surged to around 640p per therm in 2022.
Putin has also suggested Russia could once again supply oil to European customers, provided future cooperation was “long-term” and not politicised.
The European Union and UK banned seaborne imports of Russian crude in December 2022 following Moscow’s invasion of Ukraine.
According to the International Energy Agency, EU imports of Russian fossil fuels fell by nearly 90% between 2021 and 2024 as Europe sought to reduce its dependence on Russian energy.