Crude oil futures plunged Monday, with Brent settling below $100/bbl for the first time in nearly two weeks, after President Trump postponed threatened attacks on Iranian energy infrastructure for five days following "productive" talks with Iran, although Tehran denied it was in talks with the U.S.
Trump's announcement on Truth Social kicked off another highly volatile trading session; in fact, four of the six largest swings ever seen in Brent futures have come since the Middle East started on February 28, according to Bloomberg.
"It is unclear how far back-channel talks have progressed or if the IRGC is in any mood to settle at this stage when they remain in firm control of the Strait of Hormuz," RBC Capital analysts including Helima Croft said in a note, referring to the Islamic Revolutionary Guard Corps.
The International Energy Agency is considering the release of more oil reserves and is speaking with member countries to determine whether it is necessary, executive director Fatih Birol said on Monday.
However, U.S. Energy Secretary Wright said it is "highly unlikely" that the U.S. will release more barrels from the Strategic Petroleum Reserve than recently announced plans for 172M barrels; he said the U.S. release started Friday afternoon, sooner than expectations that the first oil could take three weeks to start flowing.
Goldman Sachs raised its oil price forecast for the year because of what it called the "largest oil supply shock ever," now expecting Brent crude to average $85/bbl in 2026, up from a previous forecast of $77, while U.S. WTI crude is seen at $79/bbl, compared to $72/bbl previously.
Goldman estimated losses in crude output in the Middle East will increase from ~11M bbl/day to a peak of 17M bbl/day before fully recovering over four weeks once production resumes, leaving total losses just above 800M barrels.
Front-month Nymex crude (CL1:COM) for May delivery plummeted 10.3% to $88.13/bbl, and front-month Brent crude (CO1:COM) for May delivery sank 10.9% to $99.94/bbl, with both benchmarks posting their lowest settlement values since March 11.
U.S. gasoline (XB1:COM) and diesel futures (HO1:COM) also plunged by ~10% Monday after settling at their highest since 2022 on Friday.
U.S. natural gas futures (NG1:COM) fell below $3/MMBtu, pulled down by the decline in oil prices and warming spring weather that would reduce heating demand; Nymex gas (NG1:COM) for April delivery closed down 6.6% to $2.891/MMBtu, its lowest settlement value since February 27.
