Crude oil prices slumped nearly 10% on Tuesday morning after US president Donald Trump indicated the Iran war could be short-lived and signalled the possibility of easing oil-related sanctions on some countries.
At 8:15 AM, the April Brent contract on the Intercontinental Exchange was trading at $89.36 per barrel, down 9.70% from its previous close.
West Texas Intermediate (WTI) crude on the NYMEX was trading at $85.79 per barrel.
The decline came after a sharp rally on Monday, when Brent prices surged to nearly $120 per barrel, the highest level since July 2022, amid fears the conflict could disrupt global supply.
Addressing the media on Monday, Trump said the US administration would remove oil-related sanctions and suggested the war could end soon, easing market concerns that had pushed prices to multi-year highs.
Although the president said he did not believe the conflict would end this week, he added the operation was ahead of schedule.
“We’re looking to keep the oil prices down,” he told the media.
Taking to social media platform Truth Social, the US president warned Iran of stronger attacks if oil shipments through the Strait of Hormuz were disrupted.
“If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far. Additionally, we will take out easily destroyable targets that will make it virtually impossible for Iran to ever be built back, as a Nation, again — Death, Fire, and Fury will reign upon them — But I hope, and pray, that it does not happen!” he said.
Reserve debate
After prices crossed $100 per barrel on Monday, G7 countries held discussions on the possibility of releasing oil from the strategic reserves of members of the International Energy Agency (IEA).
A Reuters report said there was broad agreement not to release stocks for now.
There had initially been consideration to release 400 million barrels from strategic reserves, according to reports.
The Reuters report added that countries are prepared to take “necessary measures” to support global energy supply, including releasing stockpiles, but have stopped short of doing so immediately.
India stance
According to an Indian government official, India is unlikely to participate in any such coordinated reserve release.
During a similar exercise in 2022, after the Russia-Ukraine war began, India released strategic reserves alongside major economies to ease global supply concerns.
“The priority of the government is to meet the demand within the country,” said the official, who requested anonymity. “Further, India has no role in the current situation in lifting the prices, so it is unlikely that the country would participate in this process.”
Import impact
External affairs minister S. Jaishankar addressed the issue in the Lok Sabha on Monday.
“The interests of the Indian consumer has and will always be the overriding priority. Where required, Indian diplomacy has supported the endeavours of our energy enterprises in this volatile situation,” he said.
India imports nearly 90% of its crude oil requirement, making the economy highly sensitive to global price swings.
According to estimates, a $1 per barrel increase sustained for a year raises India’s annual import bill by about ₹16,000 crore.
