(March 25): Oil fell on reports of a US diplomatic push to end the war with Iran, which eclipsed news that more troops would be sent to the region.
West Texas Intermediate (WTI) sank as much as 4.9% to below US$88 a barrel after rising on Tuesday. Israel’s Channel 12 said Washington was seeking a one-month ceasefire for talks. Separately, The New York Times reported the US sent Iran a 15-point plan to end the conflict, citing officials briefed on the move.
Earlier, President Donald Trump’s administration ordered the 82nd Airborne Division to deploy about 2,000 soldiers to the region, according to a person familiar with the matter, as the White House weighed options to ease Iran’s hold on the Strait of Hormuz, the vital waterway that’s a focus of the conflict.
“Trump appears to be seeking serious negotiations with Iran, while also keeping his options open,” said Will Todman, a senior fellow in the Middle East Program at the Center for Strategic and International Studies. It is unclear if the additional troops are “part of his negotiating strategy, or if he is truly preparing for a ground invasion,” he added.
Oil remains on track for a substantial monthly surge after a volatile run of trading as investors tracked the fallout from the war, which is now in its fourth week. At the heart of the conflict, Tehran has moved to exert control over Hormuz, choking off supplies of crude and gas from Persian Gulf producers to global markets, triggering concerns of an energy crunch.
On Tuesday, President Trump signalled Iran had offered a “present” as a show of good faith in talks he has claimed are ongoing. He didn’t detail the gift, but confirmed it was related to energy flows through the strait.
See also: Crude oil resumes advance as war in Middle East may escalate
Iran has said foreign ships are allowed to cross the waterway, as long as they aren’t supporting acts of aggression against the country and follow regulations put in place by Tehran. The comments came in a letter circulated to members of the International Maritime Organization on Tuesday.
Israel — which opened the war in late February in a joint assault with the US — has showed no signs of letup. Defense Minister Israel Katz said on Tuesday that the campaign would continue “at full intensity.” In its report on the ceasefire plan, Channel 12 said that Israel was concerned about the proposal, and believed it was unlikely Iran would accept.
In a sign of the deepening shock triggered by the fighting, Chevron Corp warned California is careening toward an energy crisis, and that the company may quit refining in the state unless officials rolled back taxes and regulations. California, the most populous US state, is particularly exposed as it imports about 20% of its refined fuels from Asia.
See also: Oil tumbles as Trump claims talks on ending Middle East conflict
Petroleum products have rallied even harder than crude oil in recent weeks. In the US, average nationwide diesel prices have surged well above US$5 a gallon to the highest level since late 2022. In California, the fuel used for trucking, construction and agriculture has topped US$7 a gallon to hit a record.
With refiners across the world rushing to secure alternative supplies of oil — especially processors in Asia — US crude exports are poised to surge next month, with some participants expecting record overseas flows.
Uploaded by Isabelle Francis
