Significant signals emerged from global energy markets. In the early hours of March 20, Beijing time, international oil prices experienced a sharp decline. WTI crude futures turned lower during the U.S. market's final trading session after having surged over 5% earlier. Brent crude futures saw its gains narrow to 1.18%, having previously jumped nearly 11%. The shift followed an announcement by Israeli Prime Minister Benjamin Netanyahu on March 19, stating that Israel would "comply" with a U.S. presidential request to "pause" subsequent airstrikes on energy infrastructure. This development prompted a narrowing of losses across the three major U.S. stock indices, with brief turns into positive territory late in the session. Concurrently, recent comments from U.S. Treasury Secretary Janet Yellen helped ease tensions in the energy markets. Yellen indicated that the United States has not attacked Iran's energy infrastructure, has permitted the continued transit of Iranian oil through the Gulf region, and may lift sanctions on Iranian oil shipments at sea within the coming days. Additionally, the U.S. is considering another release from the Strategic Petroleum Reserve to curb oil prices.
Oil prices plummeted sharply overnight. International crude benchmarks retreated significantly, with WTI crude futures ultimately closing down 0.19% after an initial surge exceeding 5%. Brent crude futures also briefly turned negative before settling with a modest 1.18% gain at $108.65 per barrel, having earlier approached $120 per barrel during a rally of nearly 11%. As Asian markets opened, both WTI and Brent futures continued their downward trend, declining by 1.78% and 0.33% respectively at the time of reporting.
Regarding the news backdrop, according to CCTV News, the U.S. President stated on Thursday that he had informed Israeli Prime Minister Netanyahu not to attack energy facilities within Iran. When questioned about potential plans to lift sanctions on Iranian oil or deploy U.S. military forces to the region, the President affirmed that he would not deploy troops anywhere and that the U.S. would take all necessary measures to maintain oil price stability. The President also mentioned that the U.S. requires more funding to support the war effort against Iran. Subsequently, as reported by Xinhua News Agency, Netanyahu, responding to media inquiries during a press conference, stated that Israel had "unilaterally" conducted airstrikes on an Iranian gas field and that Israel would "comply" with the request to "pause" further strikes on energy infrastructure.
Following Netanyahu's statements, losses in the three major U.S. stock indices narrowed further, with all three briefly turning positive late in the session. At the close, the Dow Jones Industrial Average was down 0.44%, the S&P 500 declined 0.27%, and the Nasdaq Composite fell 0.28%, each closing at lows not seen since last November. During the session, the Nasdaq had fallen nearly 1.4%, while the Dow and S&P 500 had also dropped over 1%. Major U.S. technology stocks declined collectively, with Tesla falling over 3%, Nvidia and Meta dropping more than 1%, and Apple, Google, Amazon, and Microsoft all posting minor losses.
Simultaneously, the U.S. Department of the Treasury announced on its website the issuance of a new Russia-related general license, permitting the sale of Russian crude oil and petroleum products loaded onto vessels since March 12.
Dennis Follmer, Chief Investment Officer at Montis Financial, commented, "The market is trying to figure out the duration of this oil price spike, which is causing the volatility." Peter Boockvar, Chief Investment Officer at One Point BFG Wealth Partners, noted, "The conflict has entered its fourth week and may not end quickly; even if it does, commodity prices certainly won't return to pre-war levels." Scott Wren from Wells Fargo Investment Institute suggested, "Market sentiment likely remains negative, with potential for further declines ahead. We believe a pullback of 7% to 10% from the highs would present a good entry opportunity."
In her latest remarks, U.S. Treasury Secretary Janet Yellen stated on March 19 that the United States has not attacked Iran's energy infrastructure, has allowed Iranian oil to continue transiting the Gulf region, and may lift sanctions on Iranian oil shipments at sea within the next few days. Furthermore, the U.S. is considering another release from the Strategic Petroleum Reserve to suppress oil prices. Yellen emphasized that the U.S. has permitted the continued flow of Iranian oil through the Strait of Hormuz and explicitly views Iranian crude as a tool for lowering oil prices. "We will use Iranian oil to bring down prices," she said. Yellen added that the U.S. could unilaterally release strategic reserves and might remove sanctions on stranded Iranian crude, preserving policy space for further price suppression. She indicated that approximately 130 million barrels of Iranian oil are currently held on vessels, suggesting that this inventory could quickly enter market supply if sanctions are eased.
On monetary policy, Yellen declined to comment on the ongoing investigation into Federal Reserve Chair Jerome Powell. She separately mentioned that if Powell remains on the Fed's Board of Governors after his term as Chair ends, it would break historical precedent. Meanwhile, Yellen revealed that meetings on Capitol Hill regarding Powell's potential successor, Kevin Warsh, are progressing smoothly, which outside observers view as the latest development in potential leadership changes at the Fed.
The International Monetary Fund stated on Thursday that it is closely monitoring the war involving Iran and its impact on energy production, warning that sustained increases in energy prices could elevate inflation globally and hinder economic growth. IMF spokesperson Julie Kozack noted during a press briefing that the conflict has severely disrupted seaborne oil and gas transportation, driving crude prices up over 50% and breaching the $100 per barrel mark. Kozack mentioned that the IMF has not yet received any emergency financing requests from member countries but stands ready to provide support. She added that IMF officials are maintaining close communication with finance ministers, central bank governors, and regional institutions. The overall economic impact of the war will depend on its duration, intensity, and scope, with the IMF planning to incorporate an assessment of these effects in its upcoming World Economic Outlook report scheduled for release during the IMF-World Bank Spring Meetings in mid-April.
