Oil prices suffered their sharpest single-session decline since the war began on February 28, plunging as much as 14 percent on Monday before partially recovering, after President Donald Trump announced a five-day pause on planned strikes against Iranian power plants, a move that briefly convinced markets a path toward ending the world’s worst energy crisis since the 1970s had opened, before Iran’s denial of any negotiations pulled prices back from session lows and underlined the fundamental uncertainty that has made global energy markets nearly impossible to navigate for four weeks.
Brent crude fell as much as 14 percent to $96 a barrel immediately after Trump posted his all-capitals announcement on Truth Social before paring a significant portion of the drop after Iran denied there were any talks. By mid-afternoon, Brent had recovered to around $102 a barrel, still down more than 4 percent for the session, having traded above $114 earlier in the day before the announcement. WTI, the U.S. benchmark, slid to $93 a barrel, having earlier hovered near $100.
The session encapsulated the war’s entire market dynamic in a single day: a pre-announcement surge driven by the expectation of imminent escalation, a violent reversal triggered by de-escalation language, and then a partial recovery when Iran’s denial reintroduced uncertainty.
The volatility of Monday’s session is inseparable from the volatility of the week that preceded it. The price of Brent crude has traded in an extraordinary range since the war began: from approximately $70 a barrel before February 28 to as high as $119.50 last week, a range of nearly $50 in less than four weeks, exceeding the entire price range of any comparable period in the history of the futures market outside the 2008 financial crisis and its immediate aftermath. Even after Monday’s sharp decline, Brent remains more than 45 percent above pre-war levels.
The average U.S. gasoline price stood at $3.94 per gallon on Sunday, according to AAA tracking — approaching the psychologically significant $4.00 level that analysts have identified as a key threshold for consumer confidence deterioration in American households.
The scale of the underlying supply disruption that is driving prices is without modern precedent. At least 40 energy assets across nine countries have been damaged since the conflict began, the International Energy Agency confirmed Monday, and the organization’s executive director, Fatih Birol, described the situation as a “major, major threat” to the global economy. He said the combined impact of the Strait of Hormuz closure and the damage to Gulf energy infrastructure already exceeded the cumulative harm of the 1973 and 1979 oil shocks and Russia’s 2022 energy war against Europe.
Analysts have estimated the loss from Middle Eastern production at between 7 million and 10 million barrels per day — a figure that dwarfs any disruption in the modern oil market’s history.
Goldman Sachs sharply revised its oil price forecasts upward on Monday even after the price decline, projecting Brent would average $110 a barrel in March and April — up from a previous forecast of $98 and approximately 62 percent above 2025’s annual average. The bank said that if Hormuz flows remained at 5 percent of normal through April 10, “prices are likely to trend higher over that period.” In a more severe scenario, it warned that if the strait remained effectively closed for 10 weeks from the war’s start, Brent daily prices would likely exceed the 2008 record of approximately $147 a barrel.
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The structural constraints limiting any quick return to pre-war price levels were spelled out bluntly by energy market analyst John Kilduff of Again Capital. The roughly 20 million barrels a day that would normally transit the Strait of Hormuz cannot be rerouted through available alternative infrastructure — even with the Saudi East-West Pipeline operating at maximum capacity of 1 to 1.5 million barrels a day, “none of these policy measures that we have been talking about really can address this situation,” he said. He added that after approximately April 1, if the Hormuz situation had not been resolved, prices would likely reprice “considerably higher,” with WTI moving well above $100 and market concerns shifting from high prices to actual shortage concerns, particularly across Asian economies.
The energy shock’s transmission into the broader global economy has moved beyond oil prices. European natural gas benchmark prices fell sharply Monday on Trump’s announcement before recovering most of their losses after Iran denied the talks. Even with Monday’s decline, European gas benchmarks remain more than double their pre-war levels — a consequence of the combined effects of the Ras Laffan LNG facility damage in Qatar, the closure of Hormuz to LNG tankers, and the anticipatory stockpiling behavior of European utilities and industrial consumers preparing for a potential extended crisis.
Asian equity markets had already priced in the escalation before Trump’s announcement provided temporary relief. South Korea’s KOSPI plunged 6.5 percent, Japan’s Nikkei 225 fell 3.5 percent, and Hong Kong’s Hang Seng Index tumbled more than 4 percent in Monday’s session, which closed before Trump’s Truth Social post. European benchmarks, catching the announcement in real time, reversed earlier losses to trade more than 1.5 percent higher.
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The IEA said Monday it was in active consultations with Canada, Mexico, and other producers about increasing output and refining capacity, and that member countries were prepared to release further volumes from strategic reserves beyond the 400 million barrels agreed on March 11 — the largest coordinated strategic release in the organization’s history — if conditions required it. “If needed, we can put more oil in the markets, both crude and products. Our stock release will help to comfort the markets, but this is not the solution,” Birol said, making clear that strategic reserves could moderate prices but could not substitute for the resumption of Hormuz shipping flows at anything approaching normal volumes.
The economic damage compounds with every day the strait remains closed. Even if a diplomatic resolution were reached and the Strait of Hormuz reopened quickly, analysts noted, damaged energy infrastructure across the Gulf will require extended periods to repair — with QatarEnergy’s CEO having confirmed last week that Ras Laffan’s LNG capacity reduction of approximately 17 percent could take three to five years to fully restore. An enhanced geopolitical risk premium is now considered structurally embedded in oil prices regardless of near-term military outcomes, fundamentally changing the global energy market’s pricing architecture for years ahead.
The five-day diplomatic window Trump opened Monday expires Saturday. Whether the Strait of Hormuz reopens within that window — and whether any structural agreement on the war’s end can be reached between parties whose accounts of events contradict each other at the most basic factual level — will determine whether Monday’s market relief proves to be the beginning of a genuine price recovery or merely the latest swing in the most volatile oil market the world has seen.