Crude oil market shock! Sudden incident in the Strait of Hormuz! U.S. President Trump issues a warning to Iran

Oil Market Experiences Major Turmoil

During the overnight U.S. stock trading session, international oil prices plummeted sharply. U.S. WTI crude oil briefly dropped nearly 19% intraday, while Brent crude saw a maximum decline of about 18%. At the start of today’s Asia-Pacific trading, oil prices rebounded. As of press time, WTI April futures rose 3.51%, trading at $86.39 per barrel. Analysts point out that the main reason for the sharp decline in oil prices is the preliminary downgrade signals from the Trump administration, with the G7 discussing releasing 300 to 400 million barrels from strategic reserves.

Meanwhile, the latest developments in the Strait of Hormuz also concern energy markets. According to CCTV News, on March 10 local time, U.S. Central Command announced that U.S. forces struck 16 Iranian moored boats near the Strait of Hormuz. Additionally, sources revealed that the U.S. has asked Israel to cease further airstrikes on Iranian energy facilities, especially oil infrastructure.

U.S. President Donald Trump posted on social media on March 10 local time, stating that if Iran deploys mines in the Strait of Hormuz, they must be removed immediately, or face “unprecedented military consequences.” Trump also warned that the U.S. would use similar technology and missile capabilities used against drug traffickers to quickly destroy any ships attempting to mine the Strait. Earlier reports indicated that U.S. intelligence agencies had begun to detect signs that Iran was preparing to deploy mines in the Strait of Hormuz.

Oil Price Volatility

This week, the international crude oil market experienced some of the most volatile movements on record.

During the U.S. midday session, WTI crude briefly fell below $80 per barrel, with intraday declines reaching 18.9%. Brent crude also dropped below $81.20, with a maximum decline of about 18%. Ultimately, WTI April futures closed down sharply by 11.94%, at $83.45 per barrel, while Brent May futures settled at $87.80 per barrel.

The core driver behind this plunge was intense policy signaling. On Monday, Trump hinted that the Iran conflict might “end soon,” then expressed willingness to engage in dialogue with Iran and announced plans to exempt some oil sanctions. According to analysts led by JPMorgan’s U.S. Market Intelligence head Andrew Tyler, the recent sharp drop in oil prices and rebound in risk assets were driven by two signals: first, the initial downgrade signals from the White House; second, discussions within the G7 about releasing 300 to 400 million barrels from strategic reserves.

Meanwhile, the International Energy Agency (IEA) Director Fatih Birol announced a “special meeting” on Tuesday to assess current oil supply security. On the same day, G7 energy ministers met in Paris to discuss the feasibility of coordinating emergency oil reserve releases. These signals collectively pushed oil prices lower, with markets betting that the worst supply shocks might be mitigated by policy interventions.

Additionally, Iraq’s Oil Ministry spokesperson stated on Tuesday that domestic oil production has decreased to 1.2 million barrels per day, as Iraq attempts to restore oil supplies in northern Kirkuk.

Jim Reid, Head of Global Macro Research and Theme Strategy at Deutsche Bank, said investors are closely watching whether the Strait of Hormuz exports can recover from the current near-standstill, especially after Saudi Arabia joined the UAE and Kuwait in further production cuts on Monday.

According to CCTV News, early morning on March 11 Beijing time, the U.S. Central Command confirmed that U.S. forces struck 16 Iranian moored boats near the Strait of Hormuz.

Additionally, on March 10 local time, three sources familiar with the matter revealed that the Trump administration has asked Israel to stop further airstrikes on Iranian energy facilities, especially oil infrastructure. This is reportedly the first clear restriction on Israeli military actions against Iran since the joint U.S.-Israel military operations began. The reasons for this request include concerns that such strikes could push global oil prices higher and provoke large-scale Iranian retaliation against Gulf energy infrastructure.

Sources said the Trump administration considers attacking Iranian oil facilities a “last resort,” to be used only if Iran first attacks Gulf energy infrastructure.

European Stock Markets Rally

On March 10, U.S. Eastern Time, the three major U.S. stock indices showed narrow fluctuations. The Dow fell 0.07%, the S&P 500 declined 0.21%, and the Nasdaq rose 0.01%. Major tech stocks had mixed performances: Nvidia and Meta gained over 1%, while Apple, Google, Amazon, and Tesla saw modest gains. Microsoft and Broadcom declined slightly.

Popular Chinese concept stocks mostly rose: the Nasdaq China Golden Dragon Index increased 1.96%, NIO surged over 15%, Alibaba and Pony.ai gained over 3%, Pinduoduo, XPeng, and Baidu rose over 2%, Bilibili and Tencent Music gained over 1%.

European markets also rallied collectively. By close, Spain’s IBEX 35 surged over 3%, the STOXX Europe 50, Germany’s DAX 30, and Italy’s FTSE MIB all rose over 2%, while France’s CAC 40 and the UK’s FTSE 100 gained over 1%.

On the news front, CCTV News reported that on March 9 U.S. Eastern Time, Trump publicly stated that the Iran conflict was “nearly over” and “ahead of schedule,” which was interpreted by markets as a potential ceasefire signal.

UBS characterized Trump’s statement as “a possible first sign of potential de-escalation,” though cautiously.

UBS noted that significant uncertainties remain: when will the U.S. and Israel actually cease attacks on Iran? Will Iran also stop its regional strikes and threats against shipping through the Strait of Hormuz?

According to UBS’s “Hormuz Shipping Tracker,” the daily number of oil and gas tankers passing through Hormuz in February was about 50, but has now sharply decreased to 1-2 vessels.

UBS wrote in its report: “Regardless of how the conflict evolves, we believe that the flow of oil and gas through the Strait of Hormuz will be the most critical data point in the near term. The duration of disruptions and the pace of flow recovery are vital to market trends.”

Daan Struyven, Co-Head of Global Commodity Research and Chief Oil Strategist at Goldman Sachs, stated in a recent report that if transportation disruptions are short-lived, the medium-term fair value of oil prices will mainly depend on crude production and commercial inventory losses. However, if shocks persist and duration is uncertain, markets may rapidly price in “demand destruction” to prevent inventories from falling below critical levels, potentially causing short-term oil prices to surge past historical peaks of 2008 and 2022.

(Article source: Securities Firms China)