Oil futures lose more than 11%, as energy ministers consider release of emergency crude reserves

By Myra P. Saefong and Nora Redmond

Group of Seven energy ministers are considering the release of petroleum from reserves.

Oil futures settled sharply lower on Tuesday, extending losses from the overnight session, as world leaders considered releasing emergency crude supplies with the Iran conflict stretching into an 11th day.

"The conflict in Iran remains a developing story with no clear end in sight," Kenny Zhu, a research analyst at Global X, said in emailed commentary. "While we don't profess to know when disruptions to the Strait of Hormuz will end or how the conflict will resolve, the result has been heightened volatility in energy markets and the rerouting of global oil and gas cargos."

West Texas Intermediate crude for April delivery (CL.1) (CLJ26) dropped nearly 12% to settle at $83.45 a barrel on the New York Mercantile Exchange, while May Brent crude (BRN00) (BRNK26) on ICE Futures Europe declined 11.2%, to $87.80 per barrel.

Prices for both grades of crude on Monday had touched intraday highs near $120 a barrel before pulling back but still settling at their highest levels since August 2022, according to Dow Jones Market Data. On Tuesday, they marked their largest daily percentage drops since March 9, 2022.

Read: Oil prices see biggest daily swing since April 2020

"Price volatility in oil futures remains historically extreme right now," said Tyler Richey, co-editor at Sevens Report Research. It is "safe to expect more volatility in the sessions ahead regardless of the direction, as the market has become almost entirely headline-driven with keen focus on the Middle East," he told MarketWatch.

In a monthly report released Tuesday, the U.S. Energy Information Administration said that it assumes that the effective closure of the Strait of Hormuz will cause oil production in the Middle East to fall further in the coming weeks.

It forecasts that Brent crude will remain above $95 a barrel over the next two months before falling below $80 in the third quarter of this year and to around $70 by the end of this year, although that depends on the duration of the conflict and resulting outages in oil production, it said. The EIA lifted its average Brent 2026 price forecast to $78.84, up by nearly 37% from the February forecast.

The retreat from session highs on Monday came after CBS reported that U.S. President Donald Trump had said the war in Iran would be over "very soon." However, the timing of a potential end to the conflict remains unclear, with Trump later that day saying in a speech to House Republicans in Florida: "We've already won in many ways, but we haven't won enough."

Read: Trump announces sanctions relief to ease oil prices, says Iran war to end 'very soon'

Meanwhile, International Energy Agency Executive Director Fatih Birol said the IEA would hold an extraordinary meeting Tuesday to "assess the current security of [oil] supply and market conditions." It also plans to decide on whether to make emergency reserves of IEA countries available to the market. That follows a discussion Monday by Group of Seven ministers who were considering a coordinated release of petroleum supplies through the IEA.

Analysts at J.P. Morgan led by Andrew Tyler, head of U.S. market intelligence, wrote in a note that relief to risk markets has come from two developments: first, the White House's initial signal of de-escalation arising from Trump's comments about the war ending, and second, the G-7's consideration of making 300 million to 400 million barrels of oil available.

Goldman Sachs has estimated that Brent crude prices could hit between $72 and $76 per barrel in a scenario where exports from the Persian Gulf are down 15 million barrels per day for 30 days. If exports are down by the same amount for 60 days, the banking giant has forecast prices to settle at between $89 and $93 a barrel.

Jim Reid, global head of macroeconomic research and thematic strategy at Deutsche Bank, noted that investors will be "keenly watching" for signs that exports via the Strait of Hormuz can increase from the current mostly suspended levels, especially because on Monday, Saudi Arabia joined the United Arab Emirates and Kuwait in cutting oil production.

"We will also be watching whether plans to release oil reserves materialize," he added.

Analysts at Commerzbank wrote that Trump is also considering several options amid continued disruptions to the supply of oil. "These include releasing emergency stockpiles, a pause to federal gas tax, and the U.S. Treasury Department's involvement in the oil futures market," they said.

-Myra P. Saefong -Nora Redmond

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03-10-26 1622ET