- Trump told aides he was prepared to end the war in Iran without reopening Hormuz.
- Kuwait says oil tanker hit in Iranian attack at Dubai port.
- Brent is heading for the highest monthly gain on record, and WTI, the highest since 2020.
Oil prices reversed course in Asian trading on Tuesday, paring earlier gains, following a report that US President Donald Trump told aides he was prepared to end the war in Iran without reopening the Strait of Hormuz.
Brent crude futures for May were down $1.22, or 1.08%, at $111.56 a barrel at 0210 GMT after rising 2% earlier in the session. The May contract expires on Tuesday and the June contract, the most active, was at $105.76.
U.S. West Texas Intermediate futures for May fell 98 cents, or 0.95%, to $101.90 a barrel after hitting their highest level since March 9 in early trading.
Analysts said the drop in prices is a temporary reaction to the idea of the war ending, but that a significant change in prices would not materialize until flows through the Strait of Hormuz are fully restored.
Trump told aides he was prepared to end the military campaign against Iran even if the Strait of Hormuz remained largely closed and postpone its reopening until a later date. The Wall Street Journal ” reported Monday, citing administration officials.
On Monday, Trump warned that the United States would “wipe out” Iran’s energy plants and oil wells if Tehran did not reopen the waterway.
Iran’s effective closure of the Strait of Hormuz, which typically carries about a fifth of the world’s oil supply and a large number of liquefied natural gas tankers, has sent Brent futures up 59% so far in March, their highest monthly gain on record, while WTI is up 58% this month, the highest since May 2020.
“Even though diplomatic signals remain mixed, the ground reality suggests that uncertainty will persist,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
“Even if there is de-escalation, restoring damaged infrastructure will take time, keeping supplies tight.”
Underscoring the threat the war between Iran, the United States and Israel poses to maritime energy supplies, Kuwait Petroleum Corp said on Tuesday that its fully loaded Al Salmi oil tanker, capable of carrying up to 2 million barrels, was hit by an alleged Iranian attack at a Dubai port. Authorities also warned of possible oil spills in the region.
Yemen’s Iran-aligned Houthi forces targeted Israel with missiles on Saturday, raising new concerns about possible disruptions to the Bab el-Mandeb Strait, the chokepoint connecting the Red Sea and the Gulf of Aden, a key route for ships traveling between Asia and Europe via the Suez Canal.
Saudi crude exports have been diverted through this passage, with volumes redirected from the Gulf to the Red Sea port of Yanbu reaching 4.658 million barrels per day last week, according to Kpler data, a sharp increase from an average of 770,000 bpd in January and February.
Meanwhile, in the United States, crude oil inventories are expected to have declined last week, as are distillate and gasoline inventories, according to a preliminary estimate. Reuters poll shown Monday.
“Conflicting statements and signals about the state of the war are increasing and truth and facts are the biggest casualties,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“Crude oil is likely to continue to be hit and directionless.”
