Crude oil futures tumbled in early trading on Tuesday following comments by US president Donald Trump that suggested potential relief to supply disruptions caused by the war in the Middle East, after a volatile previous session where Ice Brent and WTI futures surged near $120/bl before settling below $100/bl.
The front-month May Ice Brent contract slid lower by 6.6pc or $6.53/bl to $92.43/bl at 11:00am Singapore time (03:00 GMT). The contract had earlier tumbled by 11pc to a low of $88.05/bl in early Asian trading from the settlement on 9 March.
April Nymex WTI fell by 6.3pc to $88.78/bl, after earlier falling by as much as 11pc to a low of $84.43/bl from its settlement on 9 March.
Trump, in his speech before the Republican lawmakers, and later at his first press conference addressing the conflict, said that the war against Iran was both practically over — "we wiped them out in the first three days" — and also just "beginning". Trump insisted there was no contradiction between the two statements.
The Trump administration has offered US-backed insurance and naval convoys for Mideast Gulf shipping — but only after the tempo of military operations slows down. "When the time comes, the US Navy and its partners will escort tankers through the strait [of Hormuz] if needed," Trump said. "I hope they're not needed, but if it's needed, we'll escort them right through."
The administration last week offered selective relief from Russia sanctions to enable Indian refiners to import Russian crude for a month. Trump said more such measures are on the way. "We have sanctions on some countries, and we're going to take those sanctions off until this straightens out," Trump said.
The G7 has no immediate plan to release oil from strategic reserves in response to the disruptions caused by the war, but is prepared "to support global supply of energy such as stockpile release" in coordination with international partners, it said on 9 March.
The war has caused Saudi Arabia, the UAE and Bahrain to join Iraq and Kuwait in curbing crude output, because the near-halt in tanker traffic through the strait of Hormuz cuts Opec+'s Mideast Gulf producers off from their main export route and leaves storage space rapidly diminishing.
