Oil Slides in Wild Trading After Trump Suggests Iran War Could End Soon

SPEAKER_1 (0:00)

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Alex Ossola (0:18)

Oil prices reverse, following more than 20% from their overnight peak and ending below $100 a barrel.

David Uberti (0:25)

This is some of the wildest commodity trading on record, and it just speaks to the uncertainty in the market of how long the conflict in Iran and the broader Middle East is going to go.

Alex Ossola (0:35)

Plus, Anthropic sues the Trump administration for trying to end its contracts with the federal government. And, could Pixar's latest movie be the big new franchise Disney wants? It's Monday, March 9th. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today. It's been a wild day for oil prices, which sank 20% from their peak last night and then fell 5% more in after-hours trading. One big reason, the Group of Seven Advanced Economies is prepared to release strategic oil reserves if they're needed to stabilize the market. And then CBS News reported that President Trump said he believes that, quote, the war is very complete, pretty much. At the pump, though, many Americans are already feeling the squeeze. Gas prices have climbed 17% to an average $3.48 a gallon since the war started. Some experts are predicting that it could hit $4 a gallon by the weekend. And, of course, people are posting about gas prices on social media.

SPEAKER_4 (1:41)

So regular has gone up about 70 cents in a week or so. Which is kind of crazy.

Ben Fritz (1:50)

Prices over here, $4.79 on the regular.

SPEAKER_1 (1:56)

$4.79 on the regular.

Ben Fritz (1:59)

Extra $5.59.

SPEAKER_6 (2:00)

Guys, if you have not gotten gas, you may want to because they're even saying tomorrow that the gas prices are going to go up.

Alex Ossola (2:07)

To discuss what this means for markets, I'm joined by WSJ reporter David Uberti. David, in late trading, the US oil benchmark was dropping below $90, down from a high of $119 a barrel. What does that tell us about traders' state of mind?

David Uberti (2:21)

In short, that nobody knows what's happening or what the outlook is going forward. This is some of the wildest commodity trading on record, and it just speaks to the uncertainty in the market of how long the conflict in Iran and the broader Middle East is going to go, and the extent to which that's going to actually snarl physical supplies of oil that manufacturers, farmers, and different types of companies around the world really rely on.

Alex Ossola (2:45)

And who is benefiting from this huge run-up in oil prices?

David Uberti (2:49)

The winners in the market are the companies that produce oil that are not in the line of fire. So if you're an oil producer in West Texas or New Mexico, you are about to get a windfall profit from some of these price increases that we are seeing. And obviously, the longer it goes on, the more that will boost their bottom lines. The losers are everyone else who consumes oil. Construction crews, manufacturers, big farming companies. Oil and all of the byproducts that are created when we produce it go into basically every facet of the modern economy.

In addition, natural gas is a very key input for a lot of manufacturers around the world. They are going to experience price increases, if not already.

Alex Ossola (3:31)

What is the worst case scenario that analysts are envisioning? I mean, Iran is threatening $200 a barrel for oil. Is that possible or even likely?

David Uberti (3:40)

It's certainly possible. The extent to which it's likely is really an open question right now. Major analysts that we follow suggest that if oil shipments for the Strait of Hormuz are disrupted for weeks longer, it could push prices up to $150 a barrel. And that will have a really big impact on US economic growth and US inflation expectations. That's bad for markets broadly.

Alex Ossola (4:04)

Yeah, what are some of the political ramifications of that? If people are already starting to feel this at the pump and then it just potentially gets even more exacerbated as this conflict continues?

David Uberti (4:13)

Gasoline prices are the prices that Americans see most commonly in their day-to-day lives. You drive past them on your way to work. You fuel up your tank of gas. President Trump staked his re-election in large part on bringing down prices, including energy prices, in a very big way. And now we're seeing gasoline and diesel in particular, along with all the other byproducts of petroleum. They're actually trading higher than they were when Trump took office. But if you look at the global economy broadly, the US might be a net winner. Europe and Asia rely on imports from the Middle East for a lot of their energy. And you're seeing global markets tied to some of those economies fall in a much, much bigger way than they are in the US. The impacts are really hard to suss out because you have, on one hand, those windfall profits to producers, which obviously feed into investors' returns. On the other hand, you have the hit to consumers' bottom lines.