Oil prices plunged the most in four years as traders parsed a breathless stream of conflicting statements for clues about the viability of near-term flows through the Strait of Hormuz.
West Texas Intermediate ended the day 12% lower, the biggest drop since March 2022, to close just above $83 a barrel. The White House said the US has not escorted an oil tanker through the Strait of Hormuz, contradicting a now-deleted social media post by Energy Secretary Chris Wright claiming that it had. Iran’s semi-official Fars news agency also said there was no US military escort. The Strait typically handles a fifth of global oil flows.
The deleted post will likely “embolden Iran to double down on its current approach, as it knows the United States has few options to ease the pain to the global economy,” said Will Todman, senior fellow in Middle East Program at the Center for Strategic and International Studies. It may also heighten anxiety among Gulf oil producers, who could question whether Washington aborted such an operation, he added.
Traders monitoring flows through the key waterway voiced frustration over minute-by-minute shifts in US messaging, with some even reporting losses from the conflicting headlines. That added to extreme price swings this week as seemingly each new piece of information added to market moves, underscoring how vulnerable global energy supplies are to the current geopolitical situation.
A 60-day measure of historical volatility in most-active WTI futures is at the highest since September 2022.
Brent crude and WTI prices are almost 40% higher than the beginning of the year as the effective closure of the Strait piles more pressure on producers to curtail output with every day the Iran war goes on.
Earlier on Tuesday, oil prices were already trading lower after the Group of Seven nations asked the agency to prepare scenarios for the release of emergency oil stockpiles as the Middle East crisis roils markets. Trump, meanwhile, said he would waive oil-related sanctions and get the country’s navy to escort tankers through the vital Strait of Hormuz.
The developments collectively fueled expectations that world leaders would intervene before the worst of any supply shock emerges.
The war has sucked more than a dozen countries into the fray, and has also led to a surge in prices for natural gas and products such as diesel. US retail gasoline has jumped. And markets have been pushed in conflicting directions this week.
On Monday, benchmark contracts for oil — the world’s most traded commodity — surged as much as 29% following a weekend of unrelentingly negative news from the deepening crisis in the Middle East.
Then the mood abruptly shifted, forcing traders to make a dramatic turn on signs that global leaders would act to stabilize energy market. Later, comments from President Donald Trump that the conflict could end soon added to the pressure lower. For Brent, it was the largest-ever drop from an intraday maximum to a closing price, the sort of swings seen during the Covid pandemic.
“Just as violent as the move was to the upside, we’re likely to see equally sharp moves to the downside, whether fully justified or not, as the market waits for confirmation that meaningful volumes are actually moving through the Strait,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
Oil Prices
WTI for April delivery was 12% lower to settle at $83.45 a barrel in New York.
Brent for May settlement dropped 11% to settle at $87.80 a barrel.
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.
element
var scriptTag = document.createElement(‘script’);
scriptTag.src = url;
scriptTag.async = true;
scriptTag.onload = implementationCode;
scriptTag.onreadystatechange = implementationCode;
location.appendChild(scriptTag);
};
var div = document.getElementById(‘rigzonelogo’);
div.innerHTML += ” +
‘
‘ +
”;
var initJobSearch = function () {
////console.log(“call back”);
}
var addMetaPixel = function () {
if (-1 > -1 || -1 > -1) {
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
} else if (0 > -1 && 72 > -1)
{
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
}
}
// function gtmFunctionForLayout()
// {
//loadJS(“https://www.googletagmanager.com/gtag/js?id=G-K6ZDLWV6VX”, initJobSearch, document.body);
//}
// window.onload = (e => {
// setTimeout(
// function () {
// document.addEventListener(“DOMContentLoaded”, function () {
// // Select all anchor elements with class ‘ui-tabs-anchor’
// const anchors = document.querySelectorAll(‘a .ui-tabs-anchor’);
// // Loop through each anchor and remove the role attribute if it is set to “presentation”
// anchors.forEach(anchor => {
// if (anchor.getAttribute(‘role’) === ‘presentation’) {
// anchor.removeAttribute(‘role’);
// }
// });
// });
// }
// , 200);
//});
