Oil prices cool after hitting boil: Why did Brent and WTI fall up to 18% after nearing $120?

Global oil prices remained highly volatile on March 9 as both major benchmarks eased from their intraday highs after briefly surging close to the USD 120 per barrel mark.

Despite the pullback, prices continued to trade sharply higher amid supply concerns and escalating geopolitical tensions in the Middle East.

Oil Prices Ease After Sharp Rally

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Global benchmark Brent Crude slipped from its session high even as it held strong gains for the day. Brent crude futures were trading at USD 103.51 per barrel, up USD 10.82 or 11.67 per cent from the previous close of USD 92.69.

During the session, the contract opened at USD 99.75 and surged to an intraday high of USD 119.50. However, prices later retreated from the peak and fell about USD 15.99 or nearly 13.38 per cent from the day’s high, reflecting sharp volatility in global oil markets.

Despite the intraday pullback, Brent crude has posted strong gains in recent weeks. The benchmark is up about 49.71 per cent over the past month and nearly 46.93 per cent over the past year.

WTI Also Pulls Back From Day’s High

The US benchmark West Texas Intermediate also cooled from its session high but continued to trade significantly higher. WTI crude futures were trading at USD 98.41 per barrel, up USD 7.51 or 8.26 per cent during the session. The contract touched a high of USD 119.43 and a low of USD 96.45, indicating wide price swings in intraday trading.

From the day’s high, WTI prices declined about USD 21.02 or nearly 17.60 per cent, highlighting the sharp volatility in oil markets.

Supply Fears Drive Oil Market Rally

Crude oil prices have surged in recent sessions amid concerns over possible supply disruptions and rising geopolitical tensions in the Middle East. Energy market expert Narendra Taneja said the rally in oil prices was driven by rising stress in the global oil market as supply concerns intensified.

“The oil market had earlier shown resilience as it expected the conflict to ease within a few days. But the situation around the Strait of Hormuz has worsened, and tanker movement is almost at a standstill,” he said.

Taneja said markets are increasingly worried that crude supplies from key Gulf producers such as Iraq, Kuwait, Saudi Arabia and the United Arab Emirates could face disruptions if the situation persists.

“If oil from these major producers does not reach the global market, the supply gap will become very large, and prices will react sharply,” he said.

Strategic Route Raises Global Concerns

The situation around the Strait of Hormuz has become a major concern for global energy markets.

The Strait lies between Iran and Oman and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, it is about 21 miles or 33 kilometres wide, while shipping lanes are only about two miles wide in each direction.

Around one-fifth of the world’s total oil consumption passes through this route. According to data from analytics firm Vortexa, more than 20 million barrels of crude oil, condensate and fuel shipments moved through the strait daily on average last year.

Major exporters including Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq ship most of their crude through this route, mainly to Asian markets. Qatar also sends most of its liquefied natural gas exports through the same passage.

Market Speculation Triggers Intraday Pullback

Analysts said the sharp correction from the day’s high was partly driven by speculation that major economies could release emergency oil reserves to stabilise markets.

Market expert Anil Singhvi said reports suggested that finance ministers from the Group of Seven countries may discuss releasing emergency oil reserves.

“Media reports said finance ministers of G7 countries are discussing whether emergency oil reserves should be released to calm the market,” Singhvi said.

The discussions are expected to take place in coordination with the International Energy Agency, which maintains emergency petroleum reserves among its member countries.

According to reports, officials may consider releasing between 300 million and 400 million barrels of oil from global emergency reserves if market conditions worsen. However, there has been no official confirmation yet.

India Says No Immediate Need to Panic

Former Oil and Natural Gas Corporation chairman R. S. Sharma said the current situation has created pressure in the oil market but has not yet turned into a crisis. “There is no need to panic at the moment. Such situations have been managed earlier, and the government can handle the challenge,” Sharma said.

Meanwhile, External Affairs Minister Subrahmanyam Jaishankar said the government will ensure the country’s energy security. “We will buy oil from wherever it is available at a lower price. India’s energy security remains in our hands,” he said in Parliament.

Experts said oil prices are likely to remain volatile in the coming days as markets continue to react to geopolitical developments, supply disruptions and policy signals from major global economies.