Global energy markets saw substantial declines Thursday morning as investors anticipated a potential shift in U.S. military strategy regarding Iran, with both major oil benchmarks dropping more than $1 per barrel.
Brent crude futures declined $1.16, representing a 1.15% decrease to reach $100 per barrel by 1204 GMT. Meanwhile, U.S. West Texas Intermediate crude futures dropped $1.41, or 1.41%, settling at $98.71 per barrel. Both oil benchmarks had already closed lower during the previous trading session.
The market movement came ahead of President Donald Trump’s scheduled national address, with the president indicating to Reuters on Wednesday that the United States would conclude its military operations in Iran “fairly soon.” The speech was set for 9 p.m. EDT.
Market analyst Tony Sycamore from IG explained the trading activity in a research note, stating: “The overnight sell-off gathered pace on mounting hopes that the Iran conflict could finally be winding down.”
Sycamore added: “The market is widely expecting a decidedly dovish tone.”
Despite optimism about potential U.S. withdrawal, Sycamore warned that American departure wouldn’t automatically ensure the reopening of the crucial Strait of Hormuz shipping lane.
“If the U.S. leaves without a formal ceasefire agreement locking in free passage and leaving its regional allies and their energy assets highly exposed to Iranian strikes, a persistent risk premium is likely to linger in the oil price,” he explained.
Regional maritime security concerns continue escalating as military actions spread throughout the area. On Wednesday, Qatar’s defense ministry reported that an Iranian cruise missile struck an oil tanker chartered by QatarEnergy while operating in Qatari territorial waters.
The International Energy Agency’s director warned Wednesday that supply chain disruptions would begin affecting European economic activity starting in April. Until now, the continent had been protected by oil shipments secured through contracts signed before hostilities began.
