Oil and gas prices fall after Trump signals Iran war may be short-lived

Global oil and gas prices fell sharply on Tuesday after Donald Trump suggested the ongoing conflict involving Iran might not last long.

Oil prices had surged to nearly $120 per barrel on Monday amid fears that the war could severely disrupt energy supplies from the Middle East. However, prices dropped to around $92 after Trump told reporters the war was “very complete, pretty much,” raising hopes that the conflict could soon ease.

The drop in prices also helped lift stock markets in Europe and Asia, although markets in the United States opened slightly lower on Tuesday.

Oil and gas prices: Warning from the world’s largest oil exporter

Despite the fall in prices, the chief executive of Saudi Aramco, Amin Nasser, warned that the situation could still have serious consequences for the global economy.

He cautioned that the disruption to shipping through the Strait of Hormuz could create a major supply bottleneck if it continues.

Around 20% of the world’s oil normally passes through the narrow waterway, which connects the Persian Gulf to global markets. However, shipping traffic has largely halted since the conflict began more than a week ago.

Nasser noted that global oil reserves are already at their lowest levels in five years, meaning any prolonged disruption could drain stockpiles quickly.

“The longer the disruption goes on, the more drastic the consequences for the global economy,” he warned.

Global leaders consider releasing emergency oil

In response to the rising volatility in energy markets, the International Energy Agency held a second meeting with the Group of Seven nations to discuss possible measures to stabilise the oil market.

One option under consideration is releasing millions of barrels of crude oil from emergency national reserves.

A final decision has not yet been made, but member governments are expected to meet again to determine whether such emergency stockpiles should be used.

Tensions remain high

While markets briefly calmed, tensions remain high. Donald Trump warned that if Iran attempted to block oil shipments through the Strait of Hormuz, the United States would respond with overwhelming force.

Iran’s Islamic Revolutionary Guard Corps responded by saying the country’s armed forces would not allow the export of “a single litre of oil from the region” if the conflict escalated.

These threats have contributed to significant volatility in energy markets.

Markets react to easing fears

Despite ongoing tensions, hopes that the war might be short-lived helped boost global stock markets.

London’s FTSE 100 rose by about 1.2%, while Germany’s DAX climbed 1.9%. France’s CAC 40 also increased by around 1.4%.

In Asia, Japan’s Nikkei 225 closed nearly 3% higher, while South Korea’s KOSPI surged more than 5%.

However, US markets — including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite — slipped slightly when trading began.

Oil prices still higher than before the conflict

Even after the decline, oil prices remain significantly higher than they were before the conflict began on 28 February.

At that time, Brent crude was trading at around $73 per barrel. On Tuesday it was still hovering close to $92, reflecting continued uncertainty in global energy markets.

Gas prices also dropped sharply, with UK month-ahead gas prices falling to about 126p per therm, down from Monday’s peak of 171p.

Uncertain outlook for energy markets

Energy analysts say the market remains extremely sensitive to developments in the Middle East.

According to Alberto Bellorin, founder of investment firm InterCapital Energy, oil markets are currently in a “total tug-of-war”.

Prices could spike again if the conflict escalates or shipping routes remain blocked, but they may fall quickly if tensions ease.

For now, global markets are closely watching developments around the Strait of Hormuz, where the flow of energy supplies remains uncertain.

Source: BBC.com

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