Crude oil gave back a staggering chunk of its war-driven gains on Monday, with both benchmarks falling more than 25% from their overnight peaks after a coordinated push by governments and producers to cap the rally.
WTI dropped to $87.60 a barrel by late afternoon, down 3.30% on the session after earlier touching $119.48. Brent slid to $91.28, off 1.41%, having also breached $119 in thin overnight trading. Just hours earlier, traders were staring at the first $120 oil since 2022.
What broke the rally
Three things happened in quick succession.
First, French President Emmanuel Macron confirmed that G7 finance ministers are weighing a record release of up to 400 million barrels from strategic stockpiles. Macron, who holds the rotating G7 presidency, called it "an envisaged option" during an emergency call with IEA chief Fatih Birol. Crude futures dropped roughly 6% within minutes of the headlines.
Second, Saudi Aramco offered about 4.6 million barrels of crude on the spot market through a series of rare emergency tenders. The barrels are being rerouted through the Red Sea, bypassing the Strait of Hormuz entirely. That sent a signal: physical supply is still finding its way out of the Gulf, even with Hormuz shut.
Third, traders simply ran out of momentum. The overnight spike above $119 happened on thin Sunday liquidity, and as Asian and European desks opened, sellers overwhelmed buyers looking to lock in profits after a nearly 80% rally in ten days.
Can reserves actually fix this?
That depends on how long the Strait of Hormuz stays closed.
The waterway carries roughly 20 million barrels a day, about a fifth of global seaborne crude. A 400-million-barrel reserve release covers 20 days of that flow at best. The IEA member nations hold a combined 1.2 billion barrels in emergency stocks, but draining them too fast creates its own set of problems.
"This is a band-aid on a bullet wound," one London-based commodities trader told Reuters. "Reserves buy time. They don't reopen a strait."
Iran has ruled out any ceasefire talks while the attacks continue. Foreign Minister Abbas Araghchi told NBC News that Iran is "not asking for a ceasefire" and that the country needs "to continue fighting for the sake of our people and our security." Foreign Ministry spokesperson Esmaeil Baghaei went further, saying there is "little place to talk about anything other than defense" as long as the military campaign goes on. Without a diplomatic off-ramp, the blockade could last weeks or months.
Where oil settles from here
Before the Iran strikes on February 28, most banks expected Brent to average $58 to $60 a barrel this year. The EIA had penciled in even less. Those forecasts are now irrelevant.
The market appears to be settling into a new range. WTI is finding support around $85 to $90, roughly where the overnight surge first blew past $100 before pulling back. Brent is holding $90 to $95.
Technical analysts warn that a confirmed safe corridor or ceasefire would trigger a fast correction, filling what traders are calling the "$90 liquidity void" left by the speed of the rally. Goldman Sachs still expects prices to ease once the risk premium fades, with a baseline Brent target of $66 by year-end. On the flip side, any escalation (Iranian attacks on Saudi export terminals, a wider Gulf conflict) could send crude right back above $110.
For now, governments have bought themselves a few days. Whether that turns into weeks depends on diplomacy, not barrels.