Oil prices dive as Trump says Iran war will end ‘very soon’
By Hanna Ziady, CNN
London (CNN) — Oil prices fell sharply Tuesday after US President Donald Trump said the war with Iran would be over “very soon,” though they remain volatile and well above their levels before the conflict started.
Also on Tuesday, the world’s biggest oil exporter, Saudi Aramco, warned of the war’s potentially “catastrophic consequences” for oil markets if flows don’t resume through the vital Strait of Hormuz.
Later, US Defense Secretary Pete Hegseth said during a Pentagon briefing that the war with Iran would not end until “the enemy is totally and decisively defeated,” adding that this would be done on the United States’ timeline. The comments sparked worries that the conflict will last for a while yet.
Brent crude, the global oil benchmark, was down around 9% at one point, before paring losses to trade about 7% lower, at $92 a barrel. WTI, the US benchmark, which had also dropped more steeply earlier in the trading session, was down around 6.8%, to $88 a barrel. Those prices compare with around $73 and $67 respectively before the United States and Israel launched strikes on Iran on February 28.
Early on Monday, both oil prices surged above $100 a barrel, crossing that mark for the first time since Russia’s 2022 invasion of Ukraine. Brent neared $120 a barrel at one point Monday.
The sharp reversal in prices came after Trump’s comments during a phone interview with CBS appeared to calm markets. “I think the war is very complete, pretty much,” he told the broadcaster.
Although he later appeared to contradict those remarks, investors were also hopeful about other options now on the table to increase global oil supply and resume tanker transits through the Strait of Hormuz – the main channel for transporting the Middle East’s copious oil output to the rest of the world.
For example, the White House has said it will provide insurance and secure naval escorts for ships transiting the strait, although a clear plan hasn’t yet emerged. On Tuesday, Trump vowed to hit Iran “TWENTY TIMES HARDER” if it “does anything” to stop the flow of oil through the strait, according to a Truth Social post.
Meanwhile, the Group of Seven major developed economies, or G7, said Monday that they stood ready to support global energy markets through the release of oil reserves if necessary.
These reserves could be significant – around 1 billion barrels, excluding China and Canada, according to one estimate – and would help put a cap on oil prices. “Strategic reserves would help if the war is to be measured in weeks, which remains our base case,” said Mohit Kumar, an analyst at US investment bank Jefferies. “But if it’s an extended war lasting months, strategic reserves alone would not be sufficient,” he added.
Indeed, the outlook for prices remains highly uncertain. On Tuesday, Saudi Aramco, the world’s top oil exporter, warned of dire consequences should the war continue to disrupt oil flows through the Strait of Hormuz.
“There would be catastrophic consequences for the world’s oil markets the longer the disruption goes on, and the more drastic the consequences for the global economy,” Aramco CEO Amin Nasser said in comments published on the company’s website after it posted full-year earnings.
“While we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil and gas industry has faced,” he added, noting that global inventories of oil were at a five-year low.
With few ways to export their oil and storage tanks filling up, Middle East oil producers, including Saudi Arabia and Kuwait, have been cutting output, sparking fears that it will take longer to bring production back online once transits resume through the Strait of Hormuz.
But, speaking to analysts Tuesday, Nasser said Aramco could quickly fire up production again. “We can ramp up in days and not weeks,” he said.
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CNN’s John Liu and Catherine Nicholls contributed reporting.
