ISLAMABAD: Global oil prices on Tuesday fell sharply by 7 per cent after US President Donald Trump said that the war in the Middle East “could end soon”.
Folloring his statement, crude dropped back to below $90 per barrel after it reached $120 a barrel on Monday over fears that the conflict would cause lengthy disruption to energy supplies from the Middle East.
Brent futures were down $6.75, or 6.8pc, to $92.21 a barrel at 10:12 GMT, while US West Texas Intermediate (WTI) crude was down $6.41, or 6.8pc, to $88.36 a barrel. Both contracts fell as much as 11pc earlier, Reuters reported.
Volumes in Brent dropped to about 213,000 contracts, the lowest amount since February 27, just before the start of the conflict. Volumes in WTI fell to 212,000, the lowest since February 20.
Although oil prices are still significantly higher than they were before the war, global stock markets rebounded.
Saudi Arabia’s Aramco, the world’s biggest oil exporter, has warned of “catastrophic consequences” if the Strait of Hormuz, a shipping route crucial to global energy supplies, remains blocked.
About a fifth of the world’s oil usually passes through the narrow waterway, but traffic has all but halted since the war started more than a week ago.
Aramco’s chief executive, Amin Nasser, warned that global stockpiles of oil were at the lowest for five years and the supply bottleneck meant these would be used at a faster rate. “The longer the disruption goes on… the more drastic the consequences for the global economy,” he said.
Earlier on Monday, in an interview to CBS News, Trump said that he thought the war against Iran was “very complete” and Washington was “very far ahead” of his initial four- to five-week estimated timeframe.
“I think the war is very complete, pretty much. They have no navy, no communications, they’ve got no Air Force,” Trump stated.
When asked about the Strait of Hormuz, Trump said that ships are moving through now, but he is “thinking about taking it over.”
The Strait of Hormuz is one of the world’s key oil transit chokepoints, carrying roughly a fifth of global oil and liquefied natural gas flows. The war has left the critical shipping passageway all but shut.
