(March 11): World governments stepped up efforts to calm energy markets as the effective closure of the Strait of Hormuz, a pivotal supply route, showed no sign of ending and Iran continued attacks across the region.
The International Energy Agency (IEA) suggested the largest ever-release of oil reserves, The Wall Street Journal reported, following a emergency meeting convened after crude prices surged past US$100 a barrel this week. Its proposal, circulated on Tuesday, would exceed the 182 million barrels member countries released in 2022, after Russia invaded Ukraine.
While significant, it’s unclear how much impact that would have on a global market that consumes more than 100 million barrels of oil daily. Still, those discussions and US President Donald Trump’s assertion earlier this week that the US is close to achieving its military goals have eased the surge in energy prices. Brent is now trading around US$88 a barrel, though it remains up around 45% year-to-date.
Early on Wednesday the UK Navy said a cargo ship travelling through the Strait of Hormuz was struck by a projectile that caused a fire, the latest incident in the trade chokepoint along Iran’s southern border.
A day earlier, energy markets whipsawed amid rapidly shifting comments from the Trump administration over the war. Oil prices plummeted after Energy Secretary Chris Wright erroneously posted — and then deleted — a message that the US Navy had escorted an oil tanker through the Strait of Hormuz.
Trump posted a flurry of messages on social media. He first insisted the US had “no reports” of mines being placed in the strait, but then urged Iranian forces to remove any explosives they may have laid. The president then said the US had “hit, and completely destroyed, 10 inactive mine laying boats” and promised “more to follow”.
See also: IEA proposes massive release of emergency oil stockpiles
The conflict showed little sign of abating overnight, with Iran staging more strikes against Israel and the United Arab Emirates (UAE), and the US and Israel continuing to hit targets in the Islamic Republic.
While the US and Israel remain publicly united and their militaries are working in tandem, officials have also acknowledged that a prolonged campaign threatens to drive a wedge between them. The Trump administration — mindful of the energy markets crisis and the ramifications for the US economy — has signalled it may be ready to end hostilities soon, but Israeli Prime Minister Benjamin Netanyahu has made clear that he isn’t done yet.
See also: Global LNG hunt intensifies as Middle East war cuts supply
Saudi Arabia, Iraq, the UAE and Kuwait have all cut production because of Hormuz’s de facto closure. Saudi Aramco chief executive officer Amin Nasser warned the impact on global petroleum markets could be “catastrophic”.
The UAE’s biggest oil refinery at Ruwais halted operations after a drone strike caused a fire in the industrial area in which it’s located, according to people familiar with the matter.
The Group of Seven leaders will convene on Wednesday to discuss the crisis in Iran and its ramifications for the world economy, with traders now widely expecting central banks to have to slow their pace of interest-rate cuts.
The Pentagon on Tuesday said the US and Israel were conducting their most intense day of attacks yet against Iran.
“We will not relent until the enemy is totally and decisively defeated,” Defense Secretary Pete Hegseth told a news conference. “We do so on our timeline and at our choosing.”
The US-Israeli airstrikes have degraded Iran’s military capability, with the number of missiles and drones it has fired at Gulf states and Israel having diminished over the course of the war, now its its 12th day. US officials say more than 90% of Tehran’s launchers have been destroyed.
But dislodging the conservative clerics and the well-armed and funded Islamic Revolutionary Guard Corps that rule the country will be a formidable task. The Guards — which are separate from the regular military — has around 200,000 active troops and another 600,000 volunteers, including the Basij paramilitary militia, US assessments show.
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Iranian President Masoud Pezeshkian reiterated that Tehran is prepared to scale back the conflict “on the condition that the airspace, territory, and waters” of neighbouring countries aren’t used to launch attacks on the Islamic Republic, according to the semi-official Mehr news agency.
The likes of Saudi Arabia, the UAE and Qatar have consistently said they’re not allowing the US or Israel to use their territories or airspace for strikes on Iran.
More than 1,300 Iranians have been killed in the war so far, according to an official toll, although that number hasn’t been updated for several days.
Mojtaba Khamenei was named Iran’s supreme leader after his father, Ali Khamenei, was killed in the initial wave of strikes. Iranian state television has reported that the younger Khamenei had been injured, but the semi-official Iranian Students’ News Agency cited Yousef Pezeshkian, a son and adviser of Iran’s president, as saying he’d been told he was in good health.
At least seven US service members have died, most of them in the first two days of fighting. The White House confirmed on Tuesday that around 150 personnel had been injured so far. There have been several deaths in Gulf countries and Israel.
Israeli forces maintained attacks on southern Lebanon, aiming to degrade Iran-aligned Hezbollah. Some 570 people have been killed in Lebanon and 1,444 injured, according to the nation’s health ministry. Two Israeli soldiers were killed in the Lebanese operations.
Trump pledged during his election campaign not to allow the US to become involved in protracted foreign wars, and there’s a risk that more American casualties and sustained high gasoline prices will weigh on Republicans’ chances in November midterm elections.
US lawmakers showed deep partisan division on the war on Tuesday, as senators left a classified briefing with Pentagon officials.
Democratic Senator Richard Blumenthal said “this briefing failed to provide any reassurance to me that we have clarified objectives or strategy and that we have an end game.” Republican Senator Mike Rounds, however, defended the administration, saying “the president made the right call on this one, and he was correct as to the threats involved”.
Trump said on Monday he could waive “certain oil-related sanctions to reduce prices” but didn’t offer specifics beyond acknowledging he had discussed the topic with Russian President Vladimir Putin.
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