Oil Holds a Sharp Drop as Trump Walks Back Threats to Strike Iran’s Energy Sites
Oil steadied after plunging on Monday, as U.S. President Donald Trump backed away from threats to strike Iran’s energy infrastructure, easing fears of an immediate escalation in supply disruption.
West Texas Intermediate (WTI) traded slightly higher near $89 a barrel after a highly volatile session. Trump claimed there were talks with Iran aimed at ending the conflict, now in its fourth week. Iran, however, denied negotiations were taking place, while Israel continued attacks on Tehran. Brent posted an 11% drop.
Despite the sharp pullback, U.S. crude is still up more than 30% this month on concerns the hostilities that have rocked the Middle East could trigger a global energy crunch. The war has all but halted transit through the Strait of Hormuz, forcing Persian Gulf producers to scale back millions of barrels per day of output.
“It is unclear how far back-channel talks have progressed or if the IRGC is in any mood to settle at this stage when they remain in firm control of the Strait of Hormuz,” RBC Capital Markets analysts including Helima Croft wrote, referring to the Islamic Revolutionary Guard Corps. “Ships, not soundbites, will likely be what ultimately matters for physical markets.”
Markets appear to be pricing in a reopening of Hormuz sooner rather than later. Vitol Americas CEO Ben Marshall said investors are “singularly focused” on the possibility of a restart, speaking at the CERAWeek by S&P Global conference in Houston. While most traffic through the critical waterway remains effectively stalled, a trickle of vessels has managed to exit the Persian Gulf in recent days. Bloomberg data also showed the first supertanker carrying Iraqi crude through the strait since the near-closure was observed.
Over the weekend, Trump had threatened to bomb Iran’s energy infrastructure unless Hormuz was fully reopened within 48 hours. People familiar with the diplomatic discussions said his decision to halt strikes was seen as an effort to manage oil prices—something Trump acknowledged on Monday. “The price of oil will drop like a rock as soon as the deal is done,” he said.
Repeated shifts in messaging from the U.S. president have left investors fatigued, dampening trading volumes as markets sift through a near-constant stream of sometimes contradictory headlines. Four of the six largest moves ever recorded in Brent futures have occurred since the conflict began.
“A negotiated outcome may be the best of a series of bad options that President Trump has,” said Will Todman, a senior fellow in the Middle East Program at the Center for Strategic and International and Security Affairs. But Iran is likely to approach any talks with deep skepticism, fearing Trump is simply buying time until more military assets arrive in the region.
In the latest Asia update, WTI for May delivery rose about 1% to $88.99 a barrel at 6:46 a.m. in Singapore. Brent for May settlement closed 11% lower at $99.94 a barrel.
Source : Newsmaker.id
