Oil slips 1% as Trump signals possible end to war
What's the story
Oil prices fell by nearly 1% on Tuesday, following reports that US President Donald Trump was open to ending the war against Iran. Brent crude futures for May fell by $1.22 or 1.08% to $111.56 per barrel after a nearly 2% rise earlier in the day. The June contract was quoted at $105.76 while US West Texas Intermediate (WTI) crude futures for May fell by 98 cents or 0.95% to $101.90 per barrel after hitting their highest level since March 9 earlier in the session.
Policy change
Trump told aides he could be open to ending war
According to The Wall Street Journal, Trump has told aides he could be open to ending the war against Iran without reopening the Strait of Hormuz. On Monday, Trump had warned that if Tehran doesn't reopen the key shipping route, the US would "obliterate" its energy infrastructure and oil facilities.
Supply disruption
Brent crude futures jump nearly 60% in March
The effective closure of the Strait of Hormuz by Iran has led to a massive spike in crude prices. The passage normally accounts for nearly one-fifth of the world's oil supply and a large part of liquefied natural gas. Brent crude futures have jumped 59% so far in March, their biggest monthly gain ever, while WTI crude has surged 58% during this period, its biggest gain since May 2020.
Supply risks
Kuwait tanker hit by Iranian missile
Kuwait Petroleum Corporation has reported that its fully loaded crude tanker Al Salmi, with a capacity of up to 2 million barrels, was hit in an alleged Iranian attack at a Dubai port. The company also warned about possible oil spills in the area. Meanwhile, Yemen's Iran-backed Houthi forces launched missile strikes toward Israel on Saturday, raising fears over potential disruptions at the Bab el-Mandeb Strait—a vital maritime corridor and trade route between Asia and Europe via Suez Canal.
Market forecast
Crude oil price outlook
Aamir Makda, a Commodity & Currency Analyst at Choice Broking, said crude oil price has been rising above its key moving averages. He added these levels will be crucial support points to watch out for. Sugandha Sachdeva, the founder of SS WealthStreet, expects crude oil to trade within a wide and volatile range with key supports at $93 and $73 per barrel (Brent Crude).