Crude Oil Dips Below $112 as Trump Sees Iran Deal in 3 Weeks

Crude oil prices dipped below $112 a barrel after President Donald Trump said the US could end its war with Iran in "two to three weeks," offering the first sign of a potential de-escalation in a conflict that has removed millions of barrels of oil from the global market. The statement, made at the White House on March 31, suggested a deal with Iran could be reached even sooner.

"Given the optics, many investors can not see an early end to the conflict and markets remain anxious," Jane Foley, head of FX strategy at Rabobank, said in a note. Market reactions are "becoming more muted" because of the "huge gap" between Trump's reassurances and the lack of acknowledgement from Tehran, she added.

The skepticism is rooted in severe market dislocations. Brent crude, the international benchmark, remains up more than 50 percent since the conflict began on February 28, soaring from around $72 a barrel to a peak of $118 on March 19. The primary driver has been the effective closure of the Strait of Hormuz, the world's most critical oil chokepoint, which has cut off roughly 16 million barrels per day of supply, according to industry estimates.

At stake is whether a fragile potential for peace can overcome the realities of a widening war. While Saudi Arabia has rerouted some 4.6 million barrels per day to its Red Sea ports, Iran-backed Houthi militants have now entered the conflict, threatening the vital Bab-el-Mandeb Strait. Analysts at Rystad Energy have forecast that a closure of this second waterway could send Brent surging past $150 a barrel, a scenario that would trigger a global economic shock.

The war has sharpened concerns about the vulnerability of fossil fuel supply chains, reframing the global energy transition as a matter of national security. The disruption has far exceeded previous shocks, prompting a renewed debate about reducing reliance on imported hydrocarbons. "The energy transition never had anything to do with climate change... Security was always paramount," Jeff Currie, chief strategy officer of energy pathways at Carlyle, said at a recent industry conference.

Traders have grown accustomed to the president's market-moving statements, but the follow-through has been inconsistent. While Trump's rhetoric can cause short-term price swings, the underlying physical market constraints—such as the 16 million barrel-per-day Hormuz deficit—continue to provide a floor for prices. Until tankers are seen moving freely through the strait, the geopolitical risk premium is expected to remain firmly embedded in the price of oil.

This article is for informational purposes only and does not constitute investment advice.