By Ginika Igboke
Crude oil prices dropped sharply on Monday after U.S. President Donald Trump suggested that the conflict with Iran could be nearing its conclusion.
In futures trading, oil prices surged past $100 per barrel on Sunday and briefly approached $120 amid escalating tensions in the Middle East. By Monday, however, prices had fallen significantly, with crude trading at about $89.38 per barrel as of 9:35 p.m. EDT.
U.S. stock markets also experienced sharp swings before closing higher for the day. The S&P 500 fell as much as 1.5 percent during trading before finishing with a gain of 0.8 percent, rising 55.97 points. The Dow Jones Industrial Average gained 239.25 points, or 0.5 percent, while the Nasdaq Composite rose 308.27 points, or 1.4 percent.
The sudden drop in oil prices and rebound in stocks followed Trump’s remarks in an interview with CBS in which he said the U.S.–Israeli military campaign against Iran was “very complete, pretty much.”
Trump added that the United States was progressing “very far” ahead of the four-to-five-week timeline initially estimated for the war. The administration is also considering taking control of the Strait of Hormuz—the critical waterway connecting the Persian Gulf to the open ocean and one of the world’s most important oil shipping routes.
Gasoline Prices Rise
Despite the drop in crude prices, gasoline prices in the United States remain elevated. Data from the American Automobile Association showed the national average price for regular gasoline reached $3.47 per gallon on March 9, up more than 16 percent from a week earlier.
In California, gas prices exceeded $5 per gallon. Prices in Washington, Hawaii, Nevada, and Oregon all surpassed $4 per gallon.
The conflict with Iran began on Feb. 28 and entered its 10th day on Monday.
Experts Warn of Potential Energy Shock
Energy analysts say prolonged disruptions could still have major consequences for global energy markets.
Jim Burkhard, vice president and global head of crude oil research at S&P Global, warned that the crisis has expanded beyond transportation disruptions to include production cuts and storage challenges.
He said restoring normal output levels could be “a massive technical exercise that could last weeks or more.”
Strategists at Macquarie Group said crude prices could climb to $150 per barrel or higher if the Strait of Hormuz remains closed for several weeks. Such levels would exceed the previous peak of around $147 per barrel reached before the 2008 Financial Crisis.
Other analysts expect the disruptions to be shorter in duration. Economists at Oxford Economics forecast oil prices will average about $80 per barrel for the quarter, although they noted that the risk of a prolonged crisis has increased.
A March 5 report from ING Group projected that Brent crude could average $71 per barrel in the second quarter if the Strait of Hormuz is fully disrupted for two weeks followed by a partial disruption for another two weeks.
In a worst-case scenario in which the strait is disrupted for three months, ING analysts said prices could average around $110 per barrel.
Administration Weighs Steps to Increase Supply
Trump said on March 9 that the administration is considering lifting certain oil-related sanctions to help lower energy prices during the conflict.
“We’re looking to keep the oil prices down,” Trump said during a press conference at Trump National Doral Miami.
He said prices had risen artificially due to the conflict and described the situation as an “excursion.” Trump added that the United States may waive some sanctions temporarily to ease pressure on global energy markets.
Treasury Secretary Scott Bessent said the administration could also ease restrictions on Russian oil exports. Washington recently granted India a 30-day exemption allowing it to purchase crude from Russia.
“There are hundreds of millions of barrels of sanctioned crude on the water,” Bessent said, suggesting that easing sanctions could quickly increase supply.
Meanwhile, Senate Minority Leader Chuck Schumer urged the administration to release oil from the Strategic Petroleum Reserve to help lower gasoline prices.
Energy Secretary Chris Wright said the United States is considering selling oil from the reserve in coordination with similar releases from other countries.
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