WTI Crude Reverses From $119 After Trump Signals Iran War Ending

The Reversal

WTI crude touched $119.48 in overnight trading on Sunday as the US-Israel war on Iran entered its second week and the Strait of Hormuz remained effectively closed. By late Monday afternoon, prices had settled below $90 — a 32% drop from the session high.

The trigger was a sequence of statements from Trump. First, he told CBS News the war was "very complete, pretty much" and that the US was "very far ahead of schedule." Then, on Truth Social, he warned that Iran would be "hit twenty times harder" if it continued blocking oil flows through the Strait. Finally, in a press conference, he said the war would end "very soon" and that he planned to waive oil-related sanctions and have the Navy escort tankers through the waterway.

Traders took the cue and liquidated long positions aggressively. The conflict premium that had accumulated over ten days — driving crude from $70 pre-war to nearly $120 — was priced out in a single session.

The Supply Shock That Built the Premium

The price spike that preceded this reversal was historic. Oil crossed $100 for the first time since Russia's 2022 invasion of Ukraine as Iran brought shipping in the Strait of Hormuz to a near-halt in retaliation for the US-Israeli joint strikes that began February 28.

The Strait handles roughly 20% of global oil and LNG supply. With it effectively closed, three major OPEC producers — Iraq, the UAE, and Kuwait — cut output as barrels backed up with nowhere to go. Israel's March 8 air raids directly targeted four oil storage facilities in Tehran and Alborz province, adding another layer of supply anxiety.

The market entered extreme backwardation, with immediate barrels trading at a record $14.20 premium over next-month futures — a sign of genuine physical desperation. Qatar's energy minister warned that Gulf producers could declare force majeure, with prices potentially reaching $150 if disruptions continued.

Gasoline prices jumped roughly 50 cents in a week to $3.45 nationally, with diesel up nearly 90 cents.

G7 Reserves and What Comes Next

Alongside Trump's rhetoric, the G7 moved to contain the damage. Finance ministers convened an emergency call Monday to discuss coordinated releases from strategic petroleum reserves. US officials floated a potential release of 300 to 400 million barrels — roughly a quarter to a third of the IEA system's public stockpiles.

But the G7 did not reach agreement. Ministers opted for more analysis, effectively kicking the decision down the road. The IEA convened its own extraordinary meeting of member governments.

The market is now caught between two competing narratives. The bullish case: the Strait of Hormuz is still closed, physical supply is genuinely disrupted, and Trump's claim that the war is "very complete" may prove premature. The bearish case: the US has overwhelming incentive to restore tanker traffic, and the combination of SPR releases plus military escorts could normalize flows within days.

Mike O'Rourke of JonesTrading summarized the risk: "If oil remains at these levels for several weeks, it will be a major global headwind." For now, the market is betting that Trump's statements are more than bluster — but the Strait remains closed, and that matters more than any press conference.

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