Oil prices today: Oil plunges as Donald Trump predicts war’s end

Benchmark oil prices tumbled on Tuesday after US President Donald Trump told a reporter he thought the Middle East war is near an end.

In the afternoon, global benchmark crude fetched $US91.78 ($129.96) down more than 30 per cent from a high around $US118 a barrel it hit on a wild session of trade Monday. US West Texas Intermediate (WTI) oil also fell around 30 per cent to $US87.77 a barrel.

“Early this morning, risk assets received an additional boost as the US President was reported as saying in a phone interview with a CBS reporter that the war could be over soon and that the US was running well ahead of its previously outlined 4-5 week timeline,” said National Australia Bank economist Sally Auld.

At Tuesday lunchtime, US President Trump also used his Truth Social media platform to threaten Iran that it will be hit “20 times harder” if it attacks any shipping sailing through the Strait of Hormuz. The Strait’s effective closure since the war began has been a key driver of soaring energy prices as oil and gas supply from the Middle East to the rest of the world falls.

The G7 Group of nations is also set to hold a virtual meeting on Tuesday to discuss a possible joint release of oil reserves from their stockpiles, after they released a statement on Monday flagging their intentions. The G7 members are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Prices for London Gas Oil as the diesel benchmark also tumbled overnight. Gold traded sideways at $US5166 an ounce.

Shares rebound

On Wall Street shares jumped in response to Mr Trump’s comments and Australian equity futures added 1.5 per cent in the afternoon to post a strong recovery after the index tumbled 2.9 per cent on Monday.

“This is a market being driven by headlines, those headlines can turn on a dime. That’s making this a challenging environment for investors,” said Josh Gilbert a Market Analyst at eToro. “That intraday volatility in energy markets is almost unprecedented (and) a single comment from the US President was enough to reverse billions of dollars in losses in a matter of hours.”

On a day of broad gains among the top performers were technology stocks that rose in line with investors’ improved risk appetite. Medical software giant Pro Medicus jumped 6.2 per cent to $139.69 to take its one week gain to more than 20 per cent, with family tracking smartphone app Life360 surging 10.3 per cent.

Travel stocks also clawed back some heavy losses over the past week dominated by headlines around more than 27,000 cancelled flights as commercial travel across the Middle East all but shut down.

The biggest sectoral faller was energy in line with the plunge in energy prices. Oil and gas giants Santos and Woodside both lost more than 3 per cent as traders closed positions in anticipation of a potential end to the Middle East conflict.

Bond yields fall

Australian Government bond yields also opened sharply lower this morning as traders scaled back rate hike expectations. The yield on the Australian 10-year bond fell 12 basis points in early trade to 4.83 per cent. The 1-year government bond yield fell 11 basis points to 4.29 per cent.

As at March 9, cash rate futures traders placed just a 22 per cent chance on the Reserve Bank lifting benchmark borrowing rates at its monetary policy committee meeting on March 17. The chaos in the Middle East has prompted the market to price another 63 basis points of rate rises in 2026 to take the cash rate peak to just shy of 4.5 per cent.

Most economists still expect the RBA to next lift rates at its May 19 meeting, after it has the chance to assess March quarter inflation data due for release at the end of April.