Oil prices fall after Trump postpones attacks on Iran
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Oil prices fell on Monday morning after President Donald Trump said the US would not attack Iran’s energy infrastructure amid productive talks between the two countries.
A barrel of West Texas Intermediate, the North American benchmark, was trading below $90 US, down more than nine percent, while stock markets jumped early in trading.
By market close the S&P 500 had risen 74.52 points to 6,581.00. The Dow rose 631.00, or 1.4 percent, to 46,208.47, and the Nasdaq Composite jumped 299.15, or 1.4 percent, to 21,946.76. The S&P/TSX composite index was up 566.40 points at 31,883.81.
Trump said he was postponing the attack on Iranian power plants for five days after describing how the two countries had “a very good and productive conversation regarding the complete and comprehensive resolution of our hostilities in the Middle East.”
Oil prices have risen nearly 50 percent this month since the conflict began in the Middle East.
Trump’s latest statement is a sharp contrast to his comments over the weekend, when he threatened to escalate tensions by warning on Truth Social that if Iran did not open the Strait of Hormuz within 48 hours “completely, without any threat,” the U.S. military would begin targeting Iranian power plants, “beginning with the largest.”
In a response statement broadcast by Iranian media, the Islamic Revolutionary Guard Corps said it would “completely close” the Strait of Hormuz if the US targets Iranian energy infrastructure.
Trump has outlined military objectives for the Iran war, which include humiliating or destroying Iran’s military, its defense infrastructure, and its nuclear weapons program, in addition to protecting U.S. allies in the region.
Energy prices have surged over the past three weeks as Iran restricted access to the Strait of Hormuz, the geographical choke point through which 20 percent of the world’s oil is exported in addition to natural gas and other products.
“$200 a barrel in 2026 is not out of the realm of possibility,” analysts at energy consulting firm Wood Mackenzie said, based on prolonged disruption to Gulf exports.
Even when the conflict is resolved, “it will take a few months for the system to fully equalize again,” said Curt Barrow, an oil, fuels and chemicals analyst at S&P Global.
“The energy crisis is really moving towards a demand or availability crisis. We not only have a shortage of about 15 million barrels of crude oil per day, we also have a shortage of jet fuel and diesel and there will be a shortage of gasoline,” he said in an interview with CBC News in Houston on the sidelines of the global energy conference CERAWeek.
The North American oil industry is largely in a holding pattern with uncertainty. If prices climb too high for too long, demand for oil could collapse in the event of a global recession and the fuel would become unobtainable.
“The oilpatch is not as excited as you might think,” said Kevin Crosart, a former Alberta drilling executive who is now CEO of Avatar Innovations, a clean energy accelerator and training initiative.
“Nobody is breaking out the champagne,” Crosart said in an interview with CBC News in Houston. “This is a very serious moment with a lot of implications for the global energy industry. It’s a time of seriousness about the responsibility we have at this time. But $120 oil for the long term creates its own unique set of challenges for the industry.”
Trump’s posts on social media about the attacks came as the war with Iran entered its fourth week.
