WASHINGTON (dpa-AFX) - After soaring over the past three sessions, crude oil has plunged on Monday as traders resort to profit-taking while the blockade of the Strait of Hormuz showed mild signs of easing.
WTI Crude Oil for April delivery was last seen trading down by $5.38 (or 5.45%) at $93.33 per barrel.
Last Friday, WTI crude oil for April delivery surged $2.98 to $98.71 a barrel after surging for the previous two sessions. Today, investors opted for monetizing the gains.
The Middle East war between U.S.-Israeli combined forces versus Iran which started on February 28, entered the third week today.
The Strait of Hormuz, which serves as a crucial chokepoint for Arabian oil exports to the rest of the world, has been closed since the conflict began on February 28.
With no way to export and due to storage constraints, Arab nations scaled down production one by one, leading to a drastic surge in oil prices.
Consequently, the spike in oil prices led to inflation globally, dampening investor confidence, with experts forecasting that major global central banks would adopt a 'hawkish' stance.
However, India recently negotiated to successfully get clearance for six vessels. An oil tanker and two LPG vessels linked to Pakistan were also allowed to cross the chokepoint over the weekend. The U.S. too allowed Iranian tankers to transit.
As these mild signals hinted that the restrictions on global supply for oil could abate in due course, oil prices plunged today.
U.S. President Donald Trump claimed attacking military targets on Kharg Island in the gulf, which handles Iran's oil exports. However, Iran reported that no oil infrastructure was damaged in the strikes.
Urging other countries that receive crude oil from the Middle East to join in the U.S. efforts to secure the Strait of Hormuz, Trump also pressured his European allies, warning that NATO would have a very bad future if it fails to join with the U.S.
Despite Trump's request from China, France, Japan, South Korea, and the U.K. for a supporting hand in the war, none of the countries have responded positively so far.
Trump also stated that Iran wanted a deal to end the fight, although Iran's Foreign Minister Abbas Araghchi refuted that, stating Iran neither sought negotiations nor wants a ceasefire now as they were attacked when the talks were going on.
Analysts are concerned as a timeline on when the war ends, remains evasive.
While speaking with CBS, The Director of the White House National Economic Council, Kevin Hassett stated that the Pentagon estimates that it could take four to six weeks for the current gulf war to end.
On the economic front, the U.S. Federal Reserve's data showed that the industrial production in the U.S. increased 0.20% month-over-month in February and year-on-year, it increased 1.40%.
The U.S. capacity utilization stood at 76.30% in February, same as the previous month.
Manufacturing output rose 0.20% month-over-month in February while it increased 1.30% year-on-year.
Investors are also anticipating the upcoming monetary policy meetings of around seven major central banks of the world including the U.S. Federal Reserve in the coming days.
Yesterday, the International Energy Agency stated that oil from the reserves of the member countries would soon start to flow into global markets.
The quantum of release is estimated around 411.9 million barrels. Reportedly, 72% of the planned releases are crude oil with the remaining 28% are oil products.
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