Why Crude Oil Prices Have Fallen Back to Pre-War Levels Amid Supply Shock

Dates: February 28-March 2

What happened: On February 28, the US and Israel launched fresh strikes against Iran, marking the official start of the Iran war. Oil prices climbed higher over the weekend as traders anticipated supply disruptions in the Middle East.

On March 1, Iran officially shut down the Strait of Hormuz, the critical passage that normally oversees around 20% of the world’s oil supply.

Oil prices: By Monday, Brent surged to around $76 a barrel, up 5% from its pre-war level of $72.

Date: March 8

What happened: On March 8, Israel bombed four oil storage facilities and an oil production transfer center in Iran. It was the first of a series of attacks on energy infrastructure in the region, which sent oil prices creeping higher in the weeks ahead.

On March 12, the International Energy Agency said the war had produced the largest oil supply disruption in history.

By April 15, the Iran war was estimated to have accrued between $34 billion to $58 billion in damage to energy infrastructure, according to a report from Rystad Energy.

Oil prices: On March 8, Brent hit $100 a barrel, a key psychological threshold in the oil market. It marked the first time crude had crossed the $100-a-barrel mark since the start of the Russia-Ukraine war in 2022.

Dates: March 9-10

What happened: On March 9, oil prices neared $120 a barrel, marking their highest level since the Great Financial Crisis.

Speaking to reporters in Florida later that day, Trump suggested the war could be over soon for the first time, leading crude prices to later tumble.

“We’re achieving major strides toward completing our military objective. And some people could say they’re pretty well complete,” he said, later adding that the conflict would be over “very soon.”

Oil prices: Brent crude, the international benchmark, dropped 6% on March 10.

Date: April 7-8

What happened: On April 7, the US and Iran agreed to a two-week ceasefire, sparking the first wave of hope that the war would soon come to an end.

The deal came less than 2 hours before the 8 p.m. deadline that Trump had set for Iran to make a deal. Leading up to the ceasefire, the president threatened to launch fresh attacks on Iran, a situation that would have stoked concerns about supply disruptions from the Middle East.

Oil prices: Brent crude plummeted as much as 16% on April 8, falling to around $95 a barrel in the evening. West Texas Intermediate crude dropped as much as 19% that same day.

Date: April 17

What happened: Iran’s foreign minister, Seyed Abbas Araghchi, announced that the Strait of Hormuz was open to commercial ships in a post on social media.

“In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire,” Araghchi wrote in a post on X on Friday.

Speaking at an event in Phoenix that day, Trump said that the US’s naval blockade of the Strait remained in “full force,” but called it a “great and brilliant day for the world.”

Later that evening, Mohammad Bagher Ghalibaf, Iran’s parliamentary speaker, disputed the idea that the Strait was open.

“The President of the United States made seven claims in one hour, all seven of which are false,” Ghalifbaf wrote on X. “With the continuation of the blockade, the Strait of Hormuz will not remain open.”

Oil prices: Brent futures plummeted 9% to trade around $90 a barrel. West Texas Intermediate crude dropped 11% to around $83 a barrel.

Date: April 18

What happened: Oil prices crept back higher again as Iran said it had decided to close the Strait of Hormuz again on account of the US continuing its naval blockade.

In a statement to Iran’s Tasnim News Agency, a spokesperson for Iran’s military criticized the US’s military operation and said the Strait would “remain tightly controlled” until the blockade was lifted.

Oil prices: Brent crude jumped to $95 a barrel on April 20, up around $90 a barrel on Friday.

Date: May 4-5

What happened: Oil prices took another leg lower after the US announced Project Freedom, a military operation to escort ships that were trapped in the Strait of Hormuz.

The operation, which officially began on May 4, was thought to relieve some pressure on global oil supplies, with national stocks dwindling quickly amid the supply deficit. As of July 3, crude stocks in the US’s strategic petroleum reserve are now at their lowest levels in 43 years.

Oil prices: Brent crude dropped 4% on May 5, ending the day at around $109 a barrel.

Date: June 17

What happened: The US and Iran signed a 14-point memorandum of understanding, ending military conflict in the region.

The MOU also included an agreement for Iran to reopen the Strait of Hormuz, with the nation establishing a 60-day toll-free period for commercial ships passing through the waterway.

Oil prices: West Texas Intermediate crude dropped 2% on the news, while Brent crude traded mostly flat.

Since the MOU was signed, Brent crude has dropped 9%, trading around $71 a barrel this week. West Texas Intermediate crude has dropped 11% over the same period, trading around $68 a barrel.