- Trump tells aides he is willing to end the Iran war without reopening Hormuz.
- Kuwait says an oil tanker was hit in an Iranian attack in Dubai’s port.
- Brent goes for highest monthly gain on record, WTI for highest since 2020.
Oil prices reversed course in Asian trade on Tuesday, paring earlier gains following a report that US President Donald Trump told aides he is willing to end the Iran war without reopening the Strait of Hormuz.
Brent crude futures for May fell $1.22, or 1.08%, to $111.56 a barrel. barrel at 0210 GMT after a 2% gain earlier in the session. The May contract expires on Tuesday, and the more active June contract was at $105.76.
US West Texas Intermediate futures for May fell 98 cents, or 0.95%, to $101.90 a barrel after hitting their highest point since March 9 in early trade.
Analysts said the drop in prices is a temporary response to the idea of an end to the war, but any meaningful change in prices would not materialize until flows through the Strait of Hormuz are fully restored.
Trump told aides he is willing to end the military campaign against Iran, even if the Strait of Hormuz remains largely closed, leaving its reopening to 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 facilities and oil wells if Tehran does not reopen the waterway.
Iran’s effective closure of the Strait of Hormuz, which typically carries about a fifth of global oil supplies and a large number of floating natural gas tankers, has pushed Brent futures up 59% so far in March, their biggest monthly gain on record, while WTI is up 58% this month, the most since May 2020.
“While the diplomatic signals remain mixed, the reality suggests that uncertainty will continue,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
“Even in the event of de-escalation, it will take time to restore damaged infrastructure and keep supplies tight.”
Highlighting the threat to seaborne energy supplies from the Iran-US-Israel war, Kuwait Petroleum Corp said on Tuesday that its fully loaded crude oil tanker Al Salmi, capable of carrying up to 2 million barrels, was hit by an alleged Iranian attack in a Dubai port. Officials also warned of potential oil spills in the area.
On Saturday, Yemen’s Iran-aligned Houthi forces targeted Israel with missiles, raising new concerns about possible disruptions in the Bab el-Mandeb Strait, the choke point connecting the Red Sea and the Gulf of Aden, a key route for ships sailing between Asia and Europe via the Suez Canal.
Saudi crude exports have been diverted through this passage, with volumes diverted from the Gulf to the Red Sea port of Yanbu reaching 4.658 million barrels per day last week, Kpler data showed, up sharply from an average of 770,000 bpd in January and February.
Meanwhile, U.S. crude oil inventories were expected to have fallen last week along with distillate and gasoline inventories, a preliminary Reuters poll showed Monday.
“Contradictory statements and signals about the state of war are flying thick and fast, and truth and facts are the biggest casualty,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“Crude is likely to continue to be whipped and directionless.”
