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Oil prices have tumbled from four-year highs, capping an extraordinary 24 hours in global markets after Donald Trump suggested the US-Israel war on Iran could end “very soon”.
Brent crude, the international benchmark, surged as high as $119.50 per barrel on Monday as the Middle East conflict intensified fears of a deepening energy supply crisis.
Trump sought to play down this remarkable increase, claiming that oil prices had risen “probably less than I thought they’d go up”, while moving swiftly to reassure investors.
Brent fell to $91.58 per barrel in the hours after the US president described the war on Iran as “very complete, pretty much” in an interview with CBS News.
Once markets had closed, however, Trump made a series of conflicting remarks which suggested the conflict would continue. “We have won in many ways,” he said. “But not enough.”
He wrote on social media: “If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far.”
About a fifth of global oil and seaborne gas tankers typically pass through the strait, which has already in effect been closed for a week, heightening concerns over energy supplies which have propelled prices higher.
Tehran declared that it would not allow “one litre of oil” to be exported from the region if US and Israeli attacks continue, Iranian state media reported on Tuesday, citing a spokesperson for the regime’s Revolutionary Guards (IRGC).
The French president, Emmanuel Macron, indicated on Monday that a string of countries could deploy ships to “escort” container ships and tankers in a bid to shore up the vital trade route once “the most intense phase of the conflict” was over.
Trump’s rhetoric appeared to reassure investors. Oil prices fell sharply, after one of the most volatile days in energy markets since the height of the Covid crisis and the aftermath of Russia’s invasion of Ukraine.
The US president said Washington would waive some oil-related sanctions in a bid to ease shortages. While he did not mention Russia by name, the disclosure was made shortly after Trump spoke with Vladimir Putin, the country’s president. Such a move would risk complicating US efforts to punish Moscow for its war on Ukraine.
“We have sanctions on some countries,” Trump told reporters. “We’re going to take those sanctions off until the strait is up.”
The Trump administration last week permitted Indian refiners to temporarily buy Russian oil for 30 days – just a month after Trump claimed India had agreed to stop purchasing it, in a shift that he said would “help END THE WAR in Ukraine” by cutting off a key source of funds for Russia.
While global oil prices have dropped from Monday’s peaks, they continue to trade at significantly higher levels than just a few weeks ago.
Apprehension over elevated fuel costs, and uncertainty over supplies, prompted governments across Europe and Asia to take action. Croatia, Hungary, South Korea and Thailand have imposed price caps on fuel in recent days to mitigate the threat of shortages.
The Philippines ordered public officials to cut back on air conditioning usage and reduce travel last week. Bangladesh also moved to close all universities, bringing forward the Eid al-Fitr holidays as part of emergency measures to conserve electricity and fuel.
