Oil fell sharply on Monday, again posting one of the biggest price swings on record, after US President Donald Trump said he was holding off on striking Iranian power plants and was negotiating a potential end to the war.
Brent and West Texas Intermediate both tumbled more than 14% before clawing back some losses, with the global benchmark closing below $100 for the first time in almost two weeks.
Trump’s announcement on Truth Social kicked off a dramatic trading session, with the US president backing off a threat of hitting Iranian infrastructure.
Iran, for its part, repeatedly denied it was negotiating with the US to end the conflict.
Energy markets have been pitched into turmoil since the US and Israel launched the war in late February, with Iran virtually blocking the vital Strait of Hormuz, a transit artery for about a fifth of the world’s oil and liquefied natural gas supply.
Four of the six largest swings ever seen in Brent futures have come since the conflict started. The International Energy Agency has described the current crisis as the largest oil supply disruption in history.
Speaking at the CERAWeek by S&P Global conference in Houston, Marcel van Poecke, Carlyle’s chairman of energy, said the current disruption in the Middle East and Strait of Hormuz is unlike anything he’s seen in his career.
“We’ve never been in such a crisis, which has so many repercussions long term,” he said.
US officials have been quick to try to talk down energy markets in recent weeks, and Trump’s remarks on Monday about an end to the war were the latest in a run of comments that appear designed to tame prices.
As well as verbal interventions, the US has also announced the release of emergency oil reserves and waived some sanctions on Iranian and Russian barrels in a bid to offset some of the supply lost to the blockage of Hormuz.
The duelling rhetoric from the US and Iran followed a series of threats and military escalations that have roiled global markets, stoked inflation fears and left thousands dead across the Middle East.
Trump said US envoys Steve Witkoff and Jared Kushner are negotiating with a top Iranian official, while suggesting that the US and Iran could jointly control the Strait of Hormuz.
Iran repeatedly denied the talks were underway, limiting Monday’s sell-off.
Iran’s parliament speaker, Mohammad Bagher Ghalibaf, said in a social media post that the US president’s claims were fake news “used to manipulate the financial and oil markets.”
“The market is in utter chaos,” analysts at brokerage PVM Oil Associates wrote in a note.
Trump’s latest social media post was “a clear sign of conceding to market forces, rallying oil prices and falling equities,” they said.
Trump’s energy chief downplayed the impact the US-Israeli war with Iran is having on energy markets, saying prices haven’t risen enough to trigger “meaningful demand destruction.”
“Markets do what markets do,” Energy Secretary Chris Wright said during remarks at the CERAWeek. “Prices went up to send signals to everyone who can produce more.”
Wall Street banks have been steadily upgrading their oil price forecasts in recent weeks on the back of disruption from the conflict.
Goldman Sachs said before Trump’s post on Monday that it now expects crude to average $85 a barrel this year, up from $77 previously.
De-escalation could lead to a return of some of the lost Middle East oil production, though much would depend on how soon shipowners would be willing to resume sailing through Hormuz.
Loading ...
