Oil prices fall sharply after Trump's announcement
Natural gas also falls again after a morning marked by increases.
SydneyOil prices fell sharply after Trump postponed attacks on Iranian energy infrastructure for five days. Specifically, according to Bloomberg data, Brent crude—the European benchmark—dropped 8.98% to $103.29 at 12:30 PM on Monday. Minutes after the announcement, the price of oil plummeted by almost 17%, hitting a low of around $96 per barrel. Before Trump's postponement earlier in the morning, crude had surged to $114.43. Meanwhile, West Texas Intermediate (WTI) crude fell to $90.24 (-8.13%) before the official opening of the US market.
The same trend was observed this morning with natural gas prices. After a sharp rise throughout the morning, Trump's announcement this afternoon, in which he asserted that "very positive and productive" talks had taken place over the past two days regarding the resolution of hostilities in the Middle East, has caused prices to fall. Specifically, the price of natural gas for one-month delivery on the Dutch TTF market—the benchmark in Europe—is at €56.19 per megawatt hour (MWh), representing a 6% drop.
The IEA warning
The 1973 oil crisis turned the global economy upside down, ushering in a period of high inflation and jeopardizing the energy supplies of many Western countries. Now, with the war in Iran and the closure of the Strait of Hormuz, through which 20% of the world's oil and gas passes, a crisis that could be much worse is looming, according to the executive director of the International Energy Agency (IEA), Fatih Birol. Birol said on Monday that the situation is "very serious" and surpasses the energy crises of the 1970s. Speaking at the National Press Club of Australia in Canberra, Birol noted that the current crisis is equivalent to "two oil crises and a collector" from 1973 and 1979, triggered by embargoes and crude oil production cuts in the Middle East. "No country will be immune if the situation continues in this direction," Birol stressed during his one-day visit to Australia, where he was also scheduled to meet with Prime Minister Anthony Albanese before continuing his tour of Asia. Birol warned of the damage suffered by the regional energy sector, indicating that at least 40 infrastructure projects have been "seriously or very seriously" affected in nine countries, exacerbating supply uncertainty. The IEA chief emphasized that reopening the Strait of Hormuz is the primary way to ease tensions. Energy.
This maritime corridor remains virtually blocked following the US and Israeli attacks on Iran on February 28. In this scenario, US President Donald Trump has demanded that Tehran fully reopen the strait, under threat of attacking Iranian electrical infrastructure.
For its part, Iran has responded by warning that if its energy grid is attacked, it will retaliate against energy facilities and desalination plants in various Middle Eastern countries. The impact is already being reflected in the markets, with a surge in the price of crude oil, which has been above $100 per barrel for days, in early trading on Monday.
The IEA Director has called for international cooperation to prevent further deterioration of the situation and urged a swift resolution to the conflict, given the risk of far-reaching global economic consequences.