Oil prices fell by more than 13 per cent after US President Donald Trump said he would order the military to postpone any strikes against Iranian power plants and energy infrastructure.
Brent crude futures had fallen about $17, or 15 per cent, to a session low of $96 a barrel by 11:08 GMT while US West Texas Intermediate had fallen $13, or about 13.5 percent, to a session low of $85.28.
This comes after oil prices had spiked above $100 per barrel as Iran’s attacks on vessels had de facto closed the Strait of Hormuz.
Goldman Sachs, as cited by CNBC, on Monday sharply increased its oil price forecasts, citing continued disruption risks tied to flows through the Strait of Hormuz.
The bank now expects Brent crude to average $110 per barrel in March and April, up from an earlier estimate of $98. It also revised its WTI outlook to $98 in March and $105 in April.
Goldman analysts said prices are likely to trend higher if flows through Hormuz remain at around 5% of normal levels through April 10. They added that concerns around concentrated supply and limited spare capacity could drive governments to increase stockpiling and push up longer-dated oil prices.
The bank also said that if reduced flows persist for 10 weeks, Brent crude could exceed its 2008 peak. Brent had reached about $147 per barrel in July 2008 before falling sharply during the global financial crisis.
Meanwhile, Gita Gopinath, economist and former Deputy Managing Director of the International Monetary Fund (IMF), said the near-term outlook for oil prices remains highly uncertain and depends on how the situation evolves over the next 24 hours.
In an interview with CNBC-TV18, Gopinath said markets are currently pricing oil at around $80 per barrel, but warned that escalation risks could push prices significantly higher, with $100 per barrel emerging as a plausible scenario under adverse conditions.
She said the trajectory of oil prices would be closely linked to developments around the Strait of Hormuz and broader conflict dynamics, noting that the situation remains in a “wait-and-see mode” given the fluid geopolitical backdrop. (Al Jazeera/ Money Control)