Oil down 1% after report says Trump open to ending campaign against Iran

(Reuters)

NEW DELHI, March 31 – Oil prices reversed course in Asian trading on ‌Tuesday, paring earlier gains, following a report that U.S. President Donald Trump told aides he is willing to end the Iran war without reopening the Strait of Hormuz.

Brent crude futures for May were down $1.22, or 1.08%, to $111.56 per barrel at 0210 GMT after rising 2% earlier in the session. The May contract expires ​on Tuesday and the more active June contract was at $105.76.

U.S. West Texas Intermediate futures for May fell 98 cents, or 0.95%, ​to $101.90 a barrel after hitting their highest point since March 9 in early trading.

Analysts said the fall ⁠in prices is a temporary reaction to the idea of the war’s end, but any meaningful change in prices would not materialise until ​flows through the Strait of Hormuz are completely reinstated.

Trump told aides he is willing to end the military campaign against Iran even if the ​Strait of Hormuz remains largely closed and leave its reopening for a later date, The Wall Street Journal reported on Monday, citing administration officials.

On Monday, Trump warned that the U.S. would “obliterate” Iran’s energy plants and oil wells if Tehran did not reopen the waterway.

Iran’s effective closure of the Strait of Hormuz, which typically carries ​about a fifth of global oil supply and large numbers of liquefied natural gas tankers, has pushed Brent futures up 59% so far ​in March, their highest monthly gain ever, while WTI is up 58% this month, the most since May 2020.

“While diplomatic signals remain mixed, the ground reality suggests ‌that uncertainty ⁠will persist,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.

“Even in the event of de-escalation, restoring damaged infrastructure will take time, keeping supply tight.”

Highlighting the threat to seaborne energy supplies from the war between Iran and the U.S. and Israel, Kuwait Petroleum Corp on Tuesday said its fully loaded crude oil tanker Al Salmi, capable of carrying up to 2 million barrels, was struck by an alleged Iranian attack at a ​Dubai port. Officials also warned of ​potential oil spills in the ⁠area.