WASHINGTON (dpa-AFX) - Crude oil has nosedived on Monday as markets quickly reacted to U.S. President Donald Trump's announcement that he ordered the U.S. forces to pause any planned attacks against Iran's power plants and energy infrastructure for five days. Trump also claimed that U.S.-Iran negotiations to end the war were going on productively.
WTI Crude Oil for May delivery was last seen trading down by $10.21 (or 10.39%) at $88.02 per barrel.
The gulf war entered day number twenty-four today.
Last week, after Israel attacked Iran's South Pars gas field, which is the main source of energy to Iran's domestic needs, Iran retaliated by hitting Qatar's largest LNG plant in the Ras Laffan industrial region.
The mutual attacks sent oil prices upwards last weekend after Iranian drones targeted Mina Al-Ahmadi refinery in Kuwait which processes nearly 346,000 barrels per day of crude oil.
Today, in a social media post, Trump stated that over the last two days, the U.S. and Iran had very good and productive talks directed to end the hostilities in the Middle East.
Trump added that he has asked the Department of War to postpone any planned military strikes against Iran's power plants and energy infrastructure for a five-day period.
Today's message from Trump calmed fears of a broad-based escalation involving other Arab nations.
Earlier on Saturday, Trump had warned Iran to 'fully open' the Strait of Hormuz, a critical chokepoint for oil tankers carrying exports from Arab nations to the rest of the world, failing which Trump threatened that the U.S. will 'obliterate' Iran's power plants.
Dismissing Trump's warnings, Iran threatened it will attack not only Israel's power plants but even the neighboring nations that host U.S. bases and provides electricity to their forces.
Iran's threat raised huge concerns of widespread damage to the entire gulf as the region depends on desalinated water for drinking purposes and the plants depend on electricity to process water.
The U.S. has already eased sanctions on certain Russian oil shipments (around 130 billion barrels) for 30 days to balance the supply deficit.
Days before, Israel's Prime Minister Benjamin Netanyahu announced that in compliance with Trump's request, Israel has chosen not to target Iran's energy facilities and installations.
In addition, U.S. Treasury Secretary Scott Bessent had said in an interview with Fox Business that the U.S. was considering lifting sanctions on Iran's oil. Nearly 140 million barrels of oil has been stranded in the sea due to the U.S. curbs.
The International Energy Agency also announced its member-countries have agreed to release nearly 400 million barrels from their respective strategic reserves to offset the supply shortage.
Crude oil prices have risen nearly 30% since the gulf war began on February 28.
Inflationary pressures have compelled the U.S. Federal Reserve as well as other major global central banks to hold interest rates.
Crude oil being a dollar-denominated commodity, analysts expect that an increase in the U.S. dollar value will desist overseas buyers and as a result prices could slide.
The U.S. dollar index was last seen trading at 99.18, down by 0.46 (or 0.46%) today.
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