Crude down as Netanyahu looks to reassure on war

HONG KONG – Crude prices dipped on March 20 after Israeli Prime Minister Benjamin Netanyahu said Iran was being “decimated” and that the war would end earlier than many feared.

Traders also welcomed US President Donald Trump’s remarks that Israeli forces would not target any more of Tehran’s energy infrastructure, after strikes on a key gas field on March 18 sparked warnings of retaliation against installations across the Gulf.

But with the conflict heading into a fourth week, equities mostly fell as investors fret over energy markets, with oil still holding around US$100 and gas surging amid the effective closure of the crucial Strait of Hormuz.

Mr Netanyahu told a news conference on March 19 that Israel and the United States were “winning and Iran is being decimated”, adding that the Islamic republic no longer had the capacity to enrich uranium or manufacture ballistic missiles.

“This war is ending a lot faster than people think,” he said without providing a specific timeframe.

Mr Netanyahu also said he would help the United States try to secure Hormuz, through which a fifth of global oil and gas flows.

His comments came after Washington said there was no deadline to end the war launched against Iran on Feb 28.

Both main oil contracts sank on March 20, though they pared the losses as the day went on.

Brent remains at around US$108 and West Texas Intermediate about US$94.

Before Mr Netanyahu’s comments on March 19, the commodity had soared to as high as US$119 after Tehran struck a number of energy sites around the Gulf in retaliation for Israel’s attack on its South Pars field.

European gas prices soared more than a third at one point.

Asked whether he had talked to the prime minister about attacking Iranian gas fields, Mr Trump replied: “I did. I told him, don’t do that, and he won’t do that.

“You know, we’re independent. We get along great. It’s coordinated, but on occasion, he’ll do something, and if I don’t like it... and so we’re not doing that anymore.”

He had warned Iran earlier that US forces would “massively blow up” the South Pars field if Tehran did not stop attacking Qatar, to which Iran said it would have “zero restraint” if its energy infrastructure was hit again.

Meanwhile, French President Emmanuel Macron said his country planned to talk with permanent members of the UN Security Council about establishing a UN framework – once the ongoing exchange of fire had ended – to secure navigation in the Strait of Hormuz.

In a sign the conflict was unlikely to end soon, Israel launched a wave of strikes on Tehran on March 20 as Gulf nations faced fresh attacks, while Iran continued to target neighbours with an oil refinery in Kuwait set alight after a drone attack.

While Wall Street enjoyed a late rally on the remarks, Asian stock markets slipped as nervous traders awaited positive developments in the crisis.

Hong Kong, Shanghai, Sydney, Singapore, Taipei and Wellington all fell, though Seoul, Mumbai and Bangkok rose. Tokyo was closed for a holiday.

“Netanyahu’s remarks have poured a layer of soothing balm over sentiment, with talk of securing the Strait and claims that Iran’s nuclear and missile capabilities have been neutralised, feeding the idea that this conflict could burn out faster than feared,” wrote Mr Stephen Innes at SPI Asset Management.

“That narrative matters because it shortens the perceived life of the supply shock. But even if the geopolitical chapter closes sooner than expected, the energy system does not reset on command.

“You do not rebuild liquefaction trains, repair export terminals, or restore confidence in global shipping lanes with a press conference.” AFP