Oil plunges after Trump signals Iran war will end ‘very soon’
(Photo credit: Bloomberg)
Source: The Straits Times
Oil prices tumbled after US President Donald Trump hinted that the Iran war could end soon, easing concerns about prolonged disruptions to global oil supplies.
Global oil benchmark Brent crude plunged US$10.21, or 10.3 per cent, to US$88.75 a barrel as at 9.20am Singapore time on March 10. Brent had spiked 29 per cent to a session high of US$119.50 the previous day.
US crude benchmark, West Texas Intermediate (WTI), fell US$9.40 or 9.9 per cent to US$85.37, following a volatile session on March 9 that saw oil swing in the widest range since prices briefly turned negative during the depths of the pandemic.
Mr Trump said at a news conference on March 9 that he plans to waive oil-related sanctions and have the US navy escort tankers through the Strait of Hormuz.
“We’re looking to keep the oil prices down,”Mr Trump told reporters. “They went artificially up because of this excursion,” he said, adding that he did not believe the conflict would be over this week.
So far, investors have been skeptical about moves by the Trump administration to calm energy markets - with crude prices smashing through US$100 a barrel on March 9 before easing. Still, his latest remarks underscored a new willingness by the White House to publicly indicate that it could be moving to end the war.
“Trump saying the Iran war will be over very soon is hardly the reassurance that will get tankers sailing normally again in and out of the Strait of Hormuz,” said Vandana Hari, founder of analysis firm Vanda Insights. Investors could be “panic selling” due to the latest headlines, she added.
Mr Trump did not offer additional specifics on the plan to escort tankers or waive oil-related sanctions, beyond acknowledging he had discussed the topic with Russian President Vladimir Putin in a phone call earlier on March 9. Last week, the Trump administration cleared the way for India to temporarily increase its purchases of Russian crude, reversing months of pressure on the trade.
The conflict, which is now in its second week and has sucked more than a dozen countries into the fray, has led to a surge in energy prices, including oil, natural gas and products such as gasoil. US retail petrol has jumped to the highest level since August 2024, putting additional pressure on Mr Trump.
The intense swings on Monday saw WTI trade in a US$38 band, the widest range since prices briefly turned negative during the depths of the pandemic. Brent tumbled about US$20 from its high, marking the largest-ever drop from an intraday maximum to a closing price.
Oil surged towards US$120 a barrel early on March 9 before pulling back as the world’s largest economies considered an effort to release emergency oil reserves. Still, the vital Strait of Hormuz remains effectively closed, which has led to major producers in the Persian Gulf, including Saudi Arabia, curtailing output.
The market is keenly watching for tanker traffic to resume transiting through Hormuz, with the attack of multiple vessels since the war started leading most to shun the waterway. Still, a tanker hauling Saudi crude passed in recent days, while Iran has continued to ship large volumes through the channel.
Saudi Arabia, Iraq, Kuwait and the United Arab Emirates have all reduced output as storage rapidly fills due to the Hormuz closure. The squeeze on crude and oil product flows from the Middle East has led to refiners halting some operations and deliveries, and Asian energy buyers outbidding rivals to lure fuel shipments that were originally headed to other regions.