Oil prices rose about 20% on Monday amid growing concerns that the US-Israel war on Iran could lead to prolonged disruptions to energy supplies.
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U.S. oil prices hovered around $90 a barrel on Tuesday as investors weighed U.S. President Donald Trump’s comments on the Middle East war and oil flows through the crucial Strait of Hormuz.
brent crude oil As of 8:13 a.m. ET, oil prices fell 5.72% to $93.30 per barrel. usa crude oil It fell 4.75% to $90.27 per barrel. The decline comes after oil prices soared above $100 on Monday.
The CEO of Saudi oil giant Aramco warned on Tuesday that war could have “catastrophic consequences” for global oil markets.
Amin Nasser told an earnings conference that the war had caused a “serious chain reaction” and a “dramatic domino effect” beyond shipping to “aviation, agriculture, automobiles and other industries.”
“The longer the disruption lasts, the more severe the impact on the global economy will be,” he said, adding that it was “the biggest crisis yet” facing the region’s oil and gas industry.
Crude oil prices since the beginning of the year
President Trump suggested on Monday that the conflict with Iran could end soon and oil prices could fall, but later in the day he warned that Iran would be “hit 20 times harder” if it tried to stop the flow of oil through the Strait of Hormuz.
“If Iran does anything to stop the flow of oil in the Strait of Hormuz, it will receive 20 times more damage from the United States,” President Donald Trump said in a post on Truth Social on Monday.
This strait, located between Oman and Iran, is an important shipping route for global energy markets. According to Kpler, about 13 million barrels passed through the waterway in 2025, accounting for about 31% of global offshore oil flows.
It connects major Gulf producing countries such as Saudi Arabia, Iran, Iraq and the United Arab Emirates with the Gulf of Oman and the Arabian Sea.
“This is a gift from the United States to China and the countries that frequent the Strait of Hormuz. Hopefully, this will be a gesture that will be greatly appreciated,” Trump said in the post.
The comments came as Iran’s Foreign Ministry spokesperson warned on Monday that oil tankers passing through the Strait of Hormuz “need to exercise extreme caution.”
President Trump told CBS News by phone that same day that ships continue to pass through the Strait of Hormuz, adding: “We’re thinking about occupying the Strait of Hormuz.”
President Trump said at a press conference on Monday that the war with Iran will end “soon” and oil prices will fall.
President Trump’s comments soothed nerves over energy supply shocks and disruptions to oil distribution.
“I think there’s a lot of optimism in the market,” said Bob McNally, president of Rapidan Energy Group. “We saw it today with the collapse in oil prices, which we used to call verbal intervention by the president.”
McNally said markets were still struggling to cope with the scale of the disruption, noting that for decades traders had assumed that no country would be allowed to close off the Strait of Hormuz, the world’s most important oil chokepoint.
Mr McNally said the fact that it happened was “completely tragic and unexpected”, noting that even under tension in the 1980s the waterway was never completely closed.
For now, the market seems confident that this situation will not last long and that navigation in the Strait will eventually be restored, he added.
Mr. Trump’s comments sent the market higher, but Andy Lipow, president of Lipow Oil Associates, said it was too early to draw any concrete conclusions.
“We have to wait and see how Iran reacts to the president’s comments and whether it attacks oil infrastructure in the coming hours,” he said.
Separately, G7 energy ministers are scheduled to hold a virtual meeting later in the day to discuss the possibility of releasing emergency oil reserves aimed at easing supply disruptions caused by the Iran war, officials told CNBC.
The discussion follows Monday’s meeting of G7 finance ministers, where officials considered using the strategic reserve, but it was halted without a decision being reached.
Talks between member states have been “positive”, the sources said, adding that a coordinated move to release stockpiles is likely to take place after energy ministers meet.
The U.S. believes a joint release of 300 million to 400 million barrels, about 25 to 30 percent of the group’s total reserves of 1.2 billion barrels, is appropriate, sources said.
Fatih Birol, Director-General of the International Energy Agency, said in a statement on Monday that he attended a meeting of G7 finance ministers at France’s invitation to discuss the global economic outlook and the escalating conflict in the Middle East.
“We discussed all available options, including making the IEA’s emergency oil stocks available to the market,” he said.
IEA member countries hold official emergency oil stocks of over 1.2 billion barrels, with an additional 600 million barrels of industrial stocks held under government obligations.
Birol added that he is in close contact with energy ministers around the world, including those of Saudi Arabia, Brazil, India, Azerbaijan and Singapore.
—CNBC’s Emma Graham, Eamonn Javers, Joseph Wilkins and Spencer Kimball contributed to this report.
