(April 1): Oil fell in a volatile session on Wednesday, with traders focused on whether US President Donald Trump will soon declare an end to the war in Iran.
Brent crude slid below US$100 ($128.17) a barrel, at one point slumping more than 5%, before recovering much of that loss to trade near US$103.
Trump posted on his Truth Social network — ahead of an address to the US due later — that Tehran had asked for a ceasefire. He said America would consider such a measure once the Strait of Hormuz is reopened.
The president previously told reporters that the US may exit Iran within two to three weeks, and indicated that an agreement with Tehran might be reached but wasn’t necessary for the conflict to end.
Crude prices are still about 40% higher than they were before March as the war continues to squeeze flows through Hormuz, the conduit for about a fifth of the world’s oil. The International Energy Agency has called it the biggest supply disruption ever and prices for some fuels have at times topped US$200 a barrel.
The surge in market volatility has made intraday trading choppier, with many traders having to curb position sizes.
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In the event that the US withdraws, it’s unclear how quickly Hormuz traffic could resume — if at all — and Trump has repeatedly indicated that US allies would have to help secure the strait. Any increases in energy output from the region would also take time, though a detente would lower the risk of further damage to infrastructure.
Trump is scheduled to give an address at 9pm Eastern time on Wednesday. He has regularly vacillated between saying an Iran deal is imminent and warning he’s prepared to ramp up military operations. A third US aircraft carrier strike group is currently heading to the Middle East, suggesting a possibility of further escalation.
“Flows and actions matter more than words,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
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The jump in energy prices driven by the effective closure of Hormuz has raised fears of an inflation crisis. The retail price of US gasoline this week topped US$4 a gallon for the first time since August 2022, which will likely heap more pressure on Trump.
Iranian demands
US officials haven’t explicitly specified to whom they’re talking in Iran. The Islamic Republic’s Foreign Minister Abbas Araghchi told Al Jazeera he had received messages from the US Middle East envoy but no formal negotiations were taking place. Tehran has also laid out requirements to be met, including maintaining sovereignty over Hormuz.
While Trump on Tuesday gave a rough timeline for an end to the war, he said he would leave it to other nations to resolve issues with the strait. “We will leave because there’s no reason for us to do this,” he told reporters at the White House.
The Wall Street Journal reported that the United Arab Emirates has urged the US and military powers in Europe and Asia to form a coalition to open the waterway by force. China and Pakistan issued a joint call on Tuesday for an immediate ceasefire and for shipping to be safeguarded.
Despite the flurry of optimism over potential de-escalation, attacks were still continuing on Wednesday. An oil tanker was struck near Qatar, with a UK naval group saying the incident caused a fire that was eventually extinguished. There was no environmental damage reported.
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