Crude oil prices collapsed Tuesday in the sharpest single-day selloff since the Iran crisis began, with West Texas Intermediate dropping nearly 12% to $78.04 a barrel and Brent crude sliding to $81.88. Just 48 hours earlier, both benchmarks had been trading above $115.
The speed of the unwind stunned even veteran traders. WTI opened near $91 and fell steadily through the session, touching $77.69 at its low - a level not seen since early March, before Iranian drone strikes on Ras Tanura and the Hormuz blockade sent prices spiraling.
Trump tells CBS war will end "very soon"
The selloff kicked into gear after President Donald Trump told CBS News the conflict with Iran was "very far ahead of schedule" and would be over "very soon." He also floated the idea of the United States "taking over" the Strait of Hormuz to guarantee tanker passage.
That language carried weight. Markets had spent the past week pricing in a prolonged disruption to the 20 million barrels a day that normally transit the strait. Any hint of a quick resolution gave traders a reason to unload long positions built up during the panic.
Trump added a threat aimed at Tehran: Iran would "be hit by the United States of America TWENTY TIMES HARDER" if it continued to block oil flows.
IEA calls extraordinary meeting
Adding to the bearish pressure, IEA Executive Director Fatih Birol convened an extraordinary meeting of member nations for Tuesday to assess market conditions. The Group of Seven had already asked the agency over the weekend to prepare scenarios for a coordinated release of emergency stockpiles.
The numbers under discussion are massive. Washington believes a joint release of 300 million to 400 million barrels, roughly a quarter of the group's combined 1.2 billion-barrel reserves - would be appropriate. That would dwarf the 180 million barrels the U.S. alone released in 2022 after Russia invaded Ukraine, and the G7 reserve plan announced Sunday.
No formal decision has been made yet, but the signal alone was enough to knock another several dollars off the price.
A market whiplash for the record books
The numbers tell the story. WTI traded at roughly $66 in late February. It jumped to $72 on March 1 after the first U.S.-Israeli strikes on Iranian targets, then ripped to $90 on March 6 as the Hormuz blockade tightened. By Sunday evening it hit $115.58 - a gain of 75% in barely 10 days.
Now more than a third of that rally has evaporated in two sessions. Brent followed the same arc, peaking at $115.89 on Sunday before dropping to $81.88 Tuesday, a 29% decline from the high.
Volatility has been punishing. WTI's day range Tuesday stretched from $77.69 to $91.48, a spread of nearly $14 in a single session.
Underlying risks haven't disappeared
For all the relief rally in reverse, the physical market remains tight. Tanker traffic through Hormuz is still minimal. Iran's three main southern oilfields have seen output collapse by roughly 70%, from 4.3 million barrels per day to 1.3 million, according to Kpler data.
Aramco CEO Amin Nasser warned Monday that a continued disruption would have "catastrophic consequences for the world's oil markets." Saudi Arabia and the UAE hold the bulk of OPEC's spare capacity, but even they cannot easily export while Hormuz stays blocked.
Traders now face a tug of war: diplomatic signals pointing toward de-escalation on one side, and a physical supply gap that has not yet closed on the other. Whether prices stabilize near $80 or rebound toward $100 depends largely on what happens in the strait over the next few days.