Oil Swings After Report Trump May End War Without Hormuz Opening

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(Bloomberg) — Oil fluctuated after the Wall Street Journal reported that US President Donald Trump told aides he’s willing to end the military campaign in Iran even if the vital Strait of Hormuz remains largely closed.

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West Texas Intermediate pulled back to trade near $103 a barrel after earlier jumping almost 4% following another Iranian attack on a tanker in the Persian Gulf. Trump and his aides assessed that a mission to reopen the strait would push the war beyond his timeline of four to six weeks, according to the report, which cited administration pfficials. Brent was around $113.

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The US president has regularly vacillated between saying an end to the war is near and warning he’s prepared to ramp up military operations. On Monday, Trump said that the US will blow up power plants, oil facilities and “possibly” desalination infrastructure if Iran doesn’t re-open Hormuz.

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The war has effectively closed the Strait of Hormuz, choking off supplies of crude, natural gas and products such as diesel to global markets, leading to skyrocketing energy prices and concerns about an inflation crisis. The conflict has extended into its fifth week and attacks by the US, Israel and Iran are ongoing, including the overnight strike on the Kuwaiti tanker.

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The Al-Salmi, a fully-laden very-large crude carrier, was hit by Iran in Dubai Port causing a fire and damaging the hull, according to a statement from Kuwait Petroleum Corp. Tehran has regularly targeted ships across the Gulf since the war began, previously attacking two vessels near Iraq.

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Despite oil pulling back on Tuesday, the US benchmark is up more than 50% in March, the most since May 2020, while Brent crude is on track for a big monthly advance. The market also remains on edge about the buildup of US troops in the region and a possible ground deployment in Iran.

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“The price signals are not adequately reflecting the physical realities on the ground,” said Shaia Hosseinzadeh, chief investment officer at OnyxPoint Global Management. “Now $100 is a sort of purgatory. Too high to be stable, and too low to reflect the scale of this physical disruption.

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Trump has decided that the US should achieve its main goals of crippling Iran’s navy and missile stockpiles, and wind down current hostilities, the Wall Street Journal said, citing administration officials. Washington will pressure Tehran diplomatically to resume free flow through the strait, the report added.

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Publicly, Trump administration officials are still talking tough on the waterway. Treasury Secretary Scott Bessent told Fox News that the US is “going to retake control” of Hormuz, ensuring safe navigation “through US escorts or a multinational escort,” reiterating an earlier plan.

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Over the weekend, there was further escalation after Iran-backed Houthis in Yemen attacked Israel with missiles. Tehran is pushing the militants to prepare for a renewed campaign against Red Sea shipping, which could threaten oil supplies from alternative routes outside Hormuz, such as Saudi Arabian shipments from its Yanbu port.

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“The tone remains one step forward, five steps back on any off-ramp,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “With 10 to 12 million barrels per day still effectively missing from the market, buffers are fading and talking crude lower is becoming less effective.”

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—With assistance from Charles Gorrivan and Mia Gindis.

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