Oil prices drop more than 5% as U.S. calls for international effort to secure Strait of Hormuz

By Myra P. Saefong and Nora Redmond

The United Arab Emirates' Fujairah oil-trading hub was struck by drones on Saturday and again on Monday.

Oil futures finished sharply lower Monday, with U.S. prices down by more than 5%, as traders continued to weigh developments in the Iran conflict, which has entered its third week and has shown no signs of an easing of attacks on vital energy sites.

Prices have slipped after a sharp "geopolitical risk surge because traders are reassessing the immediate supply picture" for oil, said Nigel Green, CEO of deVere Group.

The U.S. strike on Iran's Kharg Island over the weekend and rising tensions around the Strait of Hormuz have raised fears over the global supply of crude oil. However, oil infrastructure and export flows have not been decisively shut down, Green told MarketWatch.

U.S. President Donald Trump has also been "pushing for a broader international effort to protect tanker traffic through Hormuz," Green noted. A "coordinated naval presence" aimed at keeping the world's most important oil corridor open would reduce the likelihood of a sustained supply shock, he said, and the prospect of that has helped to pull oil prices lower.

April West Texas Intermediate crude (CL.1) (CLJ26) fell 5.3% to settle at $93.50 a barrel on the New York Mercantile Exchange, after having earlier risen as high as $102.57. Brent crude for May delivery (BRN00) (BRNK26) fell 2.8% to finish at $100.21 a barrel on ICE Futures Europe, after trading as high as $106.50.

"It appears at this point that for the oil price, markets are more concerned about the ability of ships to transit the Strait of Hormuz than production levels," said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management. Some Middle East countries, such as Kuwait, Iraq and Qatar, have cut production because available storage in the region has tightened with the flow of oil through the strait virtually halted.

Regardless, crude-oil prices appear to have settled into a $90 to $100 trading range, which is still significantly higher than the $65 to $75 range that prevailed before the war started, Cieszynski told MarketWatch.

The moves in oil prices follow a U.S. military strike on Kharg Island, which provides about 90% of Iran's oil production, on Friday night. Trump, meanwhile, has urged allies to help reopen the Strait of Hormuz.

The U.S. president told the Financial Times in an interview that "it's only appropriate that people who are the beneficiaries of the strait will help to make sure that nothing bad happens there. If there's no response or if it's a negative response, I think it will be very bad for the future of NATO."

Phil Flynn, senior market analyst at the Price Futures Group, said Trump is "looking to the world to do their part and reopen the Strait of Hormuz, an international waterway that is being threatened by the Iranian regime as an act of economic warfare against the world."

Read: Trump says 'numerous countries' will help reopen the Strait of Hormuz but declines to name them

Iran's new supreme leader, Mojtaba Khamenei, warned on Thursday that the strait would remain shut and that the Islamic Republic would continue to target U.S. military bases across the Persian Gulf region.

Recognizing China's enormous stake, as most of its oil flows through the strait, Trump has pressed Beijing to play a constructive role, even using his upcoming summit with President Xi as "leverage," Flynn said in a daily report Monday. However, U.S. Treasury Secretary Scott Bessent said Monday that if Trump's planned meeting with the Chinese leader later this month were to be postponed, it would be due to logistical challenges, the Wall Street Journal reported.

On Saturday, Trump said in a post on Truth Social that U.S. strikes on had "totally obliterated" every military target on Kharg Island. U.S. Central Command said forces had struck "more than 90 Iranian military targets on Kharg Island, while preserving the oil infrastructure."

Analysts at UBS, led by Henri Patricot, wrote in a note on Monday that Brent crude prices will continue to rise in the coming weeks, as supplies continue to be disrupted by the conflict. They noted that oil could hit $120 a barrel by the end of March if flows from the strait are not improved, and could reach $150 in the second quarter.

Read: Here's how much more U.S. drivers are paying at the pump as the Iran conflict enters a third week

-Myra P. Saefong -Nora Redmond

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

03-16-26 1515ET