Crude oil storage tanks are seen in an aerial view of the Cushing Oil Hub on April 21, 2020, in Cushing, Oklahoma.
Drone Base | Reuters
Oil prices fell shortly after on Thursday. brent Oil prices hit a four-year high following reports that the US military will brief President Donald Trump on potential action against Iran.
Axios, citing two sources familiar with the matter, reported that U.S. Central Command plans to present President Trump with a plan for possible military action against Iran.
President Trump has previously reportedly rejected Tehran’s offer to reopen the Strait of Hormuz and suggested the naval blockade would continue until a broader nuclear deal is reached.
international benchmark brent Crude oil futures soared to a wartime high of $126 in early trading before falling more than 3% to close at $114.01 per barrel. us west texas intermediate Meanwhile, futures fell more than 1% to settle at $105.07.
The latest move comes amid a multi-day rally in Brent and WTI, with both contracts up about 60% since the US-Israel-led war against Iran began on February 28.
brent crude oil price
“The oil market has moved from over-optimism to the reality of supply disruptions seen in the Persian Gulf,” Warren Patterson, head of commodity strategy at Dutch bank ING, said in a research note.
“The longer this disruption lasts, the less the market can rely on inventories and the greater the need for further demand destruction. The only way to drive this will be higher oil prices.”
Goldman Sachs estimates that exports through the Strait of Hormuz choke point have fallen to just 4% of normal levels as U.S.-Iran negotiations stall and the U.S. blockade continues, tightening supplies.
Analysts at the bank said supply disruptions could deepen if the blockage continues due to Iran’s curbs on exports and limited storage capacity, adding that post-OPEC production increases in the UAE are likely to materialize gradually over the medium term rather than offsetting short-term tightness.
President Trump issues new threat to Iran
President Trump appeared to threaten Iran in a post on Truth Social on Wednesday, saying Iran “better get smart soon!”
“Iran can’t get their act together. They don’t know how to sign a non-nuclear deal. They better get smarter and faster!” Trump said. The post included a photo of President Trump holding a gun to the sound of AI-generated explosions and the words, “NO MORE MR. NICE GUY!”
Bill Perkins, chief investment officer at Schuyler Capital Management, said oil markets are being driven by a combination of physical disruption, geopolitics and investor sentiment, with traders closely tracking tanker movements and political signals as the U.S.-Iran conflict drags on.
“We are far from reaching an agreement,” he said. “Maybe it’s hostilities, or we need more time to open the Strait of Hormuz.”
He said that while strategic reserves and existing in-transit crude oil are contributing to easing oil prices, product markets are significantly strained, highlighting that even with a ceasefire, soaring diesel prices and logistics bottlenecks persist.
Goldman warned of emerging downside risks to demand, with weakness concentrated in jet fuel and petrochemical feedstocks, with global oil consumption in April likely to be about 3.6 million barrels per day lower than February levels.
Looking ahead, Perkins said oil prices could soar toward $140 to $150 a barrel if the disruption continues, but higher prices will ultimately dampen demand.
—CNBC’s Holly Ellyatt contributed to this report.
