Oil futures plunged Monday morning as President Trump said in a post he was holding off on attacks against Iran’s power infrastructure and that the US and Iran have had “VERY GOOD AND PRODUCTIVE” conversations over the past two days.
West Texas Intermediate (CL=F) crude futures sank around 9% to trade over $89 per barrel, while global benchmark Brent (BZ=F) crude pulled back to around $101 after topping $113 during earlier trading.
Oil futures moved to session lows after Trump told reporters that the Strait of Hormuz, a crucial waterway stalled since the war began, would reopen soon, but only “if this works,” referring to ongoing peace talks
Trump’s comments boosted optimism about a potential deescalation of the US-Israel conflict with Iran, following a weekend threat in which the President warned that Tehran had 48 hours to “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz,” or face strikes on its power infrastructure.
The standoff over Hormuz coupled with last week’s attacks on regional energy infrastructure, has sent oil prices soaring.
“In the very near term, the market will continue to unwind risk premium, and that move may overshoot to the downside initially,” said Rebecca Babin, CIBC Private Wealth senior energy trader.
“Until there is greater clarity on when vessels can safely transit the Strait again, the market is unlikely to fully price out disruption risk,” she added.
Read more: How oil price shocks ripple through your wallet, from gas to groceries
On Sunday, Goldman Sachs analysts raised their Brent forecast for April from $85 to $115, “as a longer disruption supports the risk premium for longer.”
The analysts also predict WTI will average $98 in March and $105 in April.
“Due to uncertainty around the duration of the shock and assuming Hormuz flows remain at 5% through April 10, prices are likely to trend higher over that period until the market gains confidence that a lengthy disruption is unlikely,” the analysts said.
Goldman Sachs also raised its 2026 average for Brent to $85, up from $77 and $79 for WTI, versus a prior expectation of $72.
The analysts noted governments are expected to rebuild higher strategic reserve levels once the Strait reopens to protect against future disruptions.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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