US-Iran war: Oil prices saw a significant correction on Tuesday, March 10, after reaching their highest level in more than three years in the previous session, as US President Donald Trump suggested that the conflict in the Middle East could end soon, easing fears of prolonged disruptions to global crude supplies.
Brent crude futures dropped $6.51, or 6.6%, to $92.45 per barrel, while West Texas Intermediate crude fell $6.12, or 6.5%, to $88.65 per barrel, on Tuesday.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also witnessed a similar downtrend. MCX crude oil prices traded at ₹8,261 per barrel, down 6%.
Oil prices had surged past the $100 a barrel on Monday, with Brent touching an intraday high of $119.50 and WTI reaching $119.48 — their highest levels since mid-2022 — amid supply cuts by Saudi Arabia and other producers due to the escalating US-Israeli conflict with Iran.
What’s driving crude oil prices?
Trump’s comments injected fresh volatility into the global energy markets, after he said in an interview with CBS News on Monday that the war against Iran “is very complete,” adding that Washington was “very far ahead” of his initial estimate that the conflict could last four to five weeks.
The US leader also told in a press conference last night that he plans to waive oil-related sanctions and have the Navy escort tankers through the Strait of Hormuz.
Responding to Trump’s remarks, the Islamic Revolutionary Guard Corps (IRGC) said it would “determine the end of the war,” warning that Tehran would not allow “one liter of oil” to be exported from the region if US and Israeli attacks continued, according to Iranian media citing the IRGC spokesperson.
Meanwhile, Gulf oil producers have started cutting output as the US–Israeli conflict with Iran disrupted shipping in the region. Over the weekend, Iraq reduced production at its main southern oilfields by 70% to 1.3 million barrels per day, while Kuwait Petroleum Corporation also began lowering output and declared force majeure.
Crude oil price outlook
According to Tony Sycamore, IG market analyst, as quoted by reuterscrude oil is expected to remain highly volatile in the near-term. “Taking the events of the past 24 hours into account, I expect crude oil to remain highly volatile, trading within a wide range between $75ish and $105ish in the sessions ahead,” Sycamore said.
Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, said that the level of $119 will act as a firm resistance and the level of $70 a support for the next few weeks for WTI crude.
“Whatever happens to the war, one thing is certain: lower oil prices for now have become a matter of the past. The bounty (in terms of relief) that the Indian government got from lower oil prices, which was and continues to be distributed as freebies, will no longer be available. The government will have to walk a tightrope now in balancing fiscal prudence with people’s expectations. Since the government’s interest is always to be voted back to power, they will choose the latter,” Sheth said.
(With inputs from agencies)
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