Oil drops as Trump pushes back timeline for Iran energy strikes

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SINGAPORE – Oil fell on March 27 after US President Donald Trump again pushed back a deadline for striking Iran’s energy sites, offering the market near-term respite while prolonging uncertainty over the course of the war well into April.

Global benchmark Brent shed as much as 2.7 per cent to near US$105 a barrel, before paring losses, while West Texas Intermediate was near US$94.

Mr Trump said that while Tehran had requested a seven-day period, he had allowed 10 days. The newly revised timeline stretches to April 6.

“Extending the ceasefire takes some near-term heat out of the market, but risks still lean to the upside,” said Ms Ewa Manthey, commodities strategist at ING Groep. With about eight million barrels a day already offline, and a much larger volume of flows through the Persian Gulf still vulnerable, “the geopolitical premium is unlikely to fade meaningfully”, she said.

With Tehran forcing the near-complete closure of the Strait of Hormuz, the conflict has severely restricted flows of energy that are vital to the global economy.

Brent crude prices have surged by 45 per cent in March, and petroleum product costs, from diesel to jet fuel, have rallied even more, burdening businesses and consumers. The increases have triggered concern about a simultaneous spike in global inflation and slowdown in growth.

“The market is getting an understanding that there is no certain end to the conflict,” said Mr Carl Larry, oil and gas analyst at Enverus. “We’re heading into another weekend with risk still to the upside.”

Mr Trump’s extended deadline allows more time for talks, as well as for the US to amass additional troops in the region, including Marine Expeditionary Units. On March 26, Mr Trump repeated an earlier framework of four to six weeks for military operations, and said the war effort was “ahead of schedule”.

While there was a roughly 60 per cent probability of the war ending by late March, there were 40 per cent odds of a longer conflict, possibly to the end of June, according to Macquarie Group analysts. The latter scenario could drive oil to US$200 a barrel, they wrote in a note.

Iran confirmed on March 26, through the Tasnim news agency, that it is waiting for a response after rejecting a 15-point US plan to end the war and offering its own conditions. Those include recognition of Tehran’s authority over Hormuz, which links the Persian Gulf to global markets.

The vital waterway carried about a fifth of global oil flows before the war started at the end of February. Despite the broader standstill, the past 24 hours have seen a marginal increase in Iran-linked ships – mostly bulk carriers and LPG vessels – attempting to pass through.

On March 26, Mr Trump said during a Cabinet meeting that Iran had allowed 10 oil tankers to sail through the strait as a goodwill gesture. Treasury Secretary Scott Bessent, meanwhile, said that an insurance programme meant to boost shipping through the artery would begin soon. BLOOMBERG