The price of oil falls sharply and drops below $100 after Trump's announcement

Oil prices have fallen sharply after Trump postponed attacks on Iranian energy infrastructure for five days. Specifically, Brent crude—the European benchmark—dropped around 9% on Monday, settling at approximately $97 a barrel. Just minutes after the US president's announcement, the price of oil plummeted to a low of $91.89 a barrel, after opening at $108.42. Meanwhile, West Texas Intermediate (WTI) crude, the US benchmark, fell to $89.27, a drop of nearly 9%. The same trend was observed this morning with natural gas prices. After rising sharply 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, brought the price down significantly. Specifically, the price of natural gas for one-month delivery on the Dutch TTF market—the benchmark in Europe—fell this Monday to 56 euros per megawatt hour (MWh), representing a drop of more than 5%. As for the stock markets, the announcement boosted the main indices in a session of high volatility. The Ibex 35—the Spanish benchmark index—closed with a gain of 1.04%, reaching 16,888.20 points. Among the stocks on the Madrid exchange that rose the most were ArcelorMittal (5.19%) and IAG (4.61%). The financial sector also contributed to the rise, with Santander leading the way with a 4.05% increase in bank share prices. Meanwhile, Repsol's shares fell by nearly 7% today following the drop in oil prices.

The rest of the European stock exchanges followed the same trend. The German DAX rose by 0.96%; Paris and Milan gained 0.79% and 0.81%, respectively. The London Stock Exchange was the only one to close in the red, falling by 0.24%. In Asia, the benchmark exchanges experienced a day of sharp declines: Tokyo fell by 3.48%, and the Seoul and Hong Kong stock exchanges dropped by 6.49% and 3.54%, respectively.

As for the currency market, the dollar is falling and the euro is at the $1.16 level. The calm that seems to have settled in the market after Trump's announcement has sent precious gold—considered a safe haven asset—below $4,400 an ounce.

The IEA warning

The 1973 oil crisis turned the global economy upside down, ushered in a period of high inflation, and jeopardized 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. The 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 has been 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 has urged a swift resolution to the conflict, given the risk of far-reaching global economic consequences.