(March 20): Oil dropped from its highest close since July 2022, as the leaders of the US and Israel sought to reassure investors rattled by damage to major Persian Gulf energy facilities.
Brent crude fell towards US$106 ($135.40) a barrel, while West Texas Intermediate for May was around US$94. President Donald Trump told reporters he’s “not putting troops anywhere” after being asked about the possibility of deploying US ground forces, while Israeli Prime Minister Benjamin Netanyahu said Israel would refrain from more attacks on Iranian energy facilities.
That followed the biggest day of strikes on energy assets since the war started almost three weeks ago, including extensive damage to the world’s biggest liquefied natural gas plant in Qatar that will take years to repair. Brent crude has gained almost 50% this month, outpacing advances in the more regional US benchmark WTI, as the near-complete closure of the Strait of Hormuz hampered supply from the region.
“Price bias for here stays asymmetric, with Brent potentially remaining higher as long as Gulf infrastructure and Hormuz risks are still live,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “WTI could be choppier and more capped because any spike invites US policy response or direct interventions.”
Prices:
- Brent for May settlement fell 2% to US$106.46 a barrel at 8.19am in Singapore.
- WTI for May delivery declined 2% to US$93.63 a barrel.
- The April contract, which expires Friday, fell 1.6% to US$94.64 a barrel.
See also: US crude is lagging behind as global oil prices skyrocket
On Thursday, Trump tried to downplay the recent spikes in oil prices during an appearance with Japan’s prime minister.
“I thought there was a chance it could be much worse,” he said. “It’s not bad, and it’s going to be over with pretty soon.”
US efforts to tame prices, including the release of strategic reserves that must be returned with interest at a later date, have widened the discount of WTI to Brent to about US$13 a barrel. That’s set up an unusual situation where Brent is set for a weekly gain of about 3%, while WTI is on a path to a 5% drop.
See also: Bessent says US may unsanction Iran oil ‘on the water’ in days
In other energy markets, European natural gas futures surged to almost double their pre-war level. Fuel prices also climbed, underscoring the wider inflationary risks from the conflict.
Netanyahu told reporters Thursday that Israel acted on its own when its jets bombed Iran’s giant South Pars gas field a day earlier, but that it would hold off from additional strikes on energy. He declined to give a timeline on ending the conflict, but said he could “see this war ending a lot faster than people think.”
Meanwhile, Treasury Secretary Scott Bessent said it’s likely Iran’s regime will probably collapse within itself. He also said the US is looking to remove sanctions on Iranian oil in an effort to lower surging energy prices triggered by the war in the Gulf, and could also look at a unilateral release of national reserves.
The White House also doesn’t plan to ban the export of oil and gas, a Trump administration official said Thursday, following a meeting between Vice President JD Vance and oil executives. The industry had warned such a move would only hurt producers.
Offering temporary relief for markets, the International Energy Agency issued details on emergency crude oil commitments by member nations. Japan, Canada and South Korea will be among the biggest contributors to the broad release of stockpiles.
“Until we have an idea of when the Strait of Hormuz will be open, we will continue to have a loss of supply in the market,” Rebecca Babin, a senior energy trader at CIBC Private Wealth Group LLC said on Bloomberg Television, “And until that timeline becomes clear, or until we have a game plan where those 10 million barrels right now is estimated to not be able to hit the market, the volatility will continue.”
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