Oil prices slump after Donald Trump comments

LONDON, May 20 (Reuters): Oil prices lost more than 2 per cent on Wednesday after US President Donald Trump again asserted that the Iran war will end "very quickly", though investors remain wary about the outcome of peace talks as disruption to Middle Eastern supply continues.

Brent crude futures fell $2.70, or 2.4 per cent, to $108.58 a barrel by 1304 GMT and US West Texas Intermediate futures were down $2.30, or 2.2 per cent, at $101.85. Both contracts were heading for their biggest daily drops in per centage and absolute terms in two weeks.

"Prices are likely to still exhibit some upside potential even if a deal is concluded, given that supply will likely not return to pre-war levels immediately," said LSEG research analyst Emril Jamil.

Both benchmarks fell nearly $1 on Tuesday after US Vice President JD Vance said that the US and Iran had made progress in talks. But Trump also said that the United States may need to strike Iran again and had been an hour away from ordering an attack before its postponement.

Analysts at Citi said on Tuesday that it expected Brent crude to rise to $120 a barrel in the near term.

stating that oil markets are underpricing the risk of prolonged supply disruption, and Wood Mackenzie estimated that it could approach $200 if the Strait of Hormuz stays largely shut until the end of the year.