Brent crude price falls nearly 11 percent, closes below $100 a barrel

Oil prices erased their initial gains and fell sharply today. They reacted to an announcement by US President Donald Trump that he had ordered the Department of Defense to conditionally postpone attacks on Iranian power plants and energy infrastructure for five days. The price of North Sea Brent crude plunged by nearly 11 percent today, closing just below $100 a barrel. Brent closed on Friday at its highest level since July 2022, Reuters reports. The price of US benchmark West Texas Intermediate (WTI) crude fell by more than ten percent today to around $88 a barrel.

On Saturday evening (overnight into Sunday, Central European Time), Trump gave Iran a 48-hour ultimatum to fully reopen the Strait of Hormuz, warning that otherwise the United States would begin destroying Iranian power plants. In response, Tehran warned that if Trump carried out his threat, Iran would attack critical infrastructure across the Middle East. According to Reuters, this marks a dramatic escalation in a conflict that has lasted more than three weeks. Oil prices rose in response during the morning.

“With this 48-hour deadline, Trump appears to have backed himself into a corner,” said Rory Johnston, founder of Commodity Context.

“It is very unlikely that Tehran would agree to Trump’s terms within such a short timeframe under the threat of an attack. And Iran is clearly capable of and willing to respond to any escalation.”

Today, Trump wrote on the Truth Social platform that the United States had held very good talks with Iran over the past two days about ending the war in the Middle East completely, and extended the originally two-day ultimatum. The president made the postponement of military strikes conditional on the success of current meetings and discussions, which he said would continue this week. He described the talks so far as detailed and, he said, wide-ranging. Tehran, however, denies that it is negotiating with the United States.

International Energy Agency (IEA) chief Fatih Birol said today that the impact of the current supply disruptions on markets is worse than the two oil shocks of the 1970s and the impact of the war between Russia and Ukraine on gas supplies combined. According to Birol, the most important solution to the problem is reopening the Strait of Hormuz.

Goldman Sachs raised its forecast for the price of Brent this year to $85 a barrel, up from its previous forecast of $77 a barrel. The bank now expects traffic through the Strait of Hormuz to remain at five percent of normal levels for six weeks.

According to experts, alongside fatigue and exceptional volatility, inconsistent communication from President Trump about the conflict is also adding to investors’ growing concerns. Shortly before issuing his two-day ultimatum over the Strait of Hormuz, the president said he was considering scaling back US military activity, Bloomberg reported.

Oil prices in dollars per barrel (about 159 litres)