Oil prices fell sharply on Monday after President Donald Trump announced that the US and Iran had held “very good and productive conversations,” leading him to pause planned strikes on Iranian energy infrastructure. West Texas Intermediate (WTI) futures dropped 8% to $90.10 per barrel, while Brent crude also fell around 8% to $103.91.
Trump, in a Truth Social post, said he had instructed the “Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five-day period.”
The post read, “I AM PLEASE TO REPORT THAT THE UNITED STATES OF AMERICA, AND THE COUNTRY OF IRAN, HAVE HAD, OVER THE LAST TWO DAYS, VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST. I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD.”
The announcement follows his 48-hour ultimatum for Iran to reopen the Strait of Hormuz, a crucial shipping route that carries roughly 20% of the world’s oil supply. Iran has signalled that it will allow safe passage for vessels not linked to “Iran’s enemies,” but the timing of a full reopening remains uncertain.
Analysts at Goldman Sachs, while noting Monday’s price drop, raised their oil price forecasts, expecting Brent crude to average $110 per barrel in March and April, up from a previous estimate of $98. WTI prices are projected at $98 in March and $105 in April. Goldman warned that if Hormuz flows remain at just 5% of normal levels for 10 weeks, Brent could surpass its 2008 record of $147 per barrel.
Fatih Birol, executive director of the International Energy Agency (IEA), described the Middle East supply disruption as “very severe,” worse than the oil shocks of the 1970s and the Russia-Ukraine gas crisis combined. IEA member nations have agreed to release a record 400 million barrels of oil from strategic reserves to ease the supply shortage, with additional releases under consideration if the Strait of Hormuz does not fully reopen.
Melissa Enoch
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