Oil prices plummeted Monday after President Donald Trump suggested that ongoing talks between the United States and Iran could end the war.

Brent crude, the global oil benchmark, fell more than 4% to around $102 a barrel, having plunged by more than 13% at one point. Earlier in the day, Brent climbed above $114 a barrel. WTI, the US benchmark, slid 5.5% to $93 a barrel, having hovered around $100 earlier in the day.

Even with the declines, crude prices remain more than a third higher than they were before the United States and Israel attacked Iran on February 28.

“I am please (sic) to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East,” Trump wrote in a social media post, noting that talks would continue “throughout the week.”

Trump added that he had instructed the US Department of War to postpone “any and all” military strikes against Iranian power plants and energy infrastructure for a five-day period, “subject to the success of the ongoing meetings and discussions.”

It was not immediately clear whether Iran agreed with Trump’s version of events.

The dramatic about-turn by Trump comes just two days after he said the United States would “obliterate” Iran’s power plants if Tehran did not reopen the Strait of Hormuz by Monday evening. Those comments came barely a day after he talked Friday about “winding down” the war.

Iran’s Islamic Revolutionary Guard Corps said it would respond in kind to any attacks on its power plants and also keep the Strait of Hormuz closed indefinitely. Those comments sent oil prices higher Sunday, with gains extending into Monday before the latest developments.

“If you strike electricity, we will strike electricity,” the IRGC said in a statement published by the semi-official Fars news agency Monday. Israeli energy and communications infrastructure and power plants of countries in the region that host US military bases would also be targeted, Iran said.

Iran’s Parliamentary Speaker Mohammed Baqer Qalibaf wrote on X Sunday that, if Trump made good on his threat, critical infrastructure and oil facilities in the Middle East would be considered “legitimate targets” and would be destroyed.

Worse than the 1970s

As the war entered its fourth week, the International Energy Agency said Monday that the reduction of global oil supply from the closure of the Strait of Hormuz was larger than the loss caused by the oil shocks of the 1970s. The agency had previously said the war was creating the largest supply disruption in the history of the global oil market.

Tehran has been effectively blockading the Strait of Hormuz, a vital waterway through which a fifth of global oil supply flows, since the start of US-Israeli attacks on Iran. With the Middle East’s oil production largely choked off from global markets, prices have soared. Attacks on energy infrastructure have driven prices higher still, including for natural gas.

At least 44 energy assets in the region have been severely or very severely damaged across nine countries, according to IEA executive director, Fatih Birol.

The energy shock as a result of the war is worse than the two consecutive oil crises in 1973 and 1979, in which the world lost about 10 million barrels of oil per day, Birol told the National Press Club of Australia on Monday. The loss of natural gas supply, meanwhile, outstrips the 2022 energy crisis linked to Russia’s invasion of Ukraine, he said.

“And not only oil and gas, some of the vital arteries of the global economy, such as petrochemical, such as fertilizers, such as sulfur, such as helium, their trade is all interrupted, which would have serious consequences for the global economy,” Birol added.

“The single most important solution to this problem is opening up the Hormuz trade.”

Birol said the agency was talking with countries including Canada and Mexico about increasing the production of crude and oil products. “We have (oil) stocks and we are incentivizing many countries with refineries to move faster than they normally do,” Birol said.

IEA member countries agreed on March 11 to release a record 400 million barrels of oil from strategic stockpiles to ease a global supply crunch and put a cap on price increases. Birol said Monday that the organization was consulting with governments around the world on releasing more oil if necessary.

“If needed, we can put more oil in the markets, both crude oil and products,” he said. “Our stock release will help to comfort the markets, but this is not the solution. It will only help to reduce the pain and the economy.”

Separately, the Trump administration temporarily lifted sanctions on Iranian oil at sea Friday, allowing the sale of 140 million barrels of oil sitting on tankers – enough to satisfy global demand for roughly a day and a half, according to the US Energy Information Administration. (CNN)

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