On Monday, April WTI crude oil closed down $10.10 (-10.28%) at a 1.5-week low, while April RBOB gasoline dropped $0.3045 (-9.42%) to a 1-week low. This decline followed President Trump’s decision to postpone military strikes on Iran’s power plants, coupled with ongoing discussions to potentially end the Iran conflict. This shift in situation led to crude prices initially rising over the weekend to their highest levels in two weeks, before plummeting on Monday.
The Strait of Hormuz, a critical waterway for global oil, remains effectively closed, prompting a 6% production cut from Persian Gulf oil producers due to capacity constraints. Goldman Sachs has warned that if flow through this strait remains limited, crude prices could exceed $150 per barrel, surpassing highs from 2008. Current floating storage data indicates that approximately 290 million barrels of Russian and Iranian crude are held on tankers, over 40% higher than last year.
The International Energy Agency noted significant damage to over 40 energy sites across the Middle East, while OPEC+ plans to increase crude output by 206,000 bpd in April, though this may be hindered by ongoing regional conflicts. Moreover, US crude oil production as of March 13 was reported at 13.668 million bpd, slightly below record levels, amidst evolving geopolitical tensions that affect global supply chains.
