Brent crude futures slip as G7 members pledge stability measures

By Siddharth Cavale

NEW YORK, March 30 (Reuters) – Brent oil prices slipped on Monday after Group of Seven finance leaders signalled readiness to act to stabilize energy markets, paring earlier gains that had pushed the global benchmark close to $117 a barrel following the Yemeni Houthis’ attacks on Israel.

Brent futures rose to a high of $116.89 a barrel earlier in the session but pared gains later in the day to trade down 52 cents or 0.5% at $112.05 at 12:36 p.m. ET (1646 GMT). U.S. West Texas Intermediate futures were up $3.45 or 3.5% at $103.09 a barrel.

Finance ministers and central bankers from the G7 countries said they stood ready to take “all necessary measures” to safeguard energy market stability and limit broader economic spillovers from recent volatility. 

Conflict has spread across the Middle East since U.S. and Israeli strikes on Iran began on February 28, stoking concerns over shipping routes around the Arabian Peninsula and the Red Sea.

Iran’s effective closure of the Strait of Hormuz, a chokepoint for roughly a fifth of global oil and gas supplies, has sent oil prices up about 58% this month, the steepest monthly jump in LSEG data going back to 1988, exceeding gains made during the 1990 Gulf War. U.S. crude, meanwhile, has climbed by 51% for its biggest monthly gain since May 2020.

U.S. Treasury Secretary Scott Bessent said on Monday that the global oil market is well supplied, with more boats travelling through the Strait of Hormuz.

“Over time, the U.S. is going to retake control of the straits and there will be freedom of navigation, whether it is through U.S. escorts or a multinational escort,” Bessent said in an interview with Fox News.

Two Chinese container ships sailed through the Strait of Hormuz on their second attempt to leave the Gulf after turning back on Friday, ship-tracking data showed.

Israel’s military said it intercepted two drones launched from Yemen on Monday, two days after Iran-aligned Houthis fired missiles at Israel for the first time since the start of the U.S.-Israeli war on Iran. The Houthis have yet to target shipping in the Red Sea, which handles about 15% of global maritime traffic.

   If the Houthis were to attack shipping and shut down the southern entrance to the Red Sea, it could drive prices up by $5 to $10 per barrel, said Robert Yawger, director of energy futures at Mizuho.

TRUMP ISSUES IRAN WARNING AGAIN

Adding to price pressures, U.S. President Donald Trump on Monday demanded that Iran reopen the Strait of Hormuz or face U.S. attacks on its oil wells and power plants. 

Previously, Trump said he would pause attacks on Iran’s energy network until April 6 and that the U.S. and Iran have been meeting “directly and indirectly” and that Tehran’s new leaders have been “very reasonable”.

Iran, however, described U.S. proposals to end a month of war in the Middle East as “unrealistic, illogical and excessive” and unleashed more missiles on Israel. 

“Trump’s extended deadline of April 6 – when the U.S. could potentially resume attacks on Iranian energy infrastructure – has had no reassuring effect. The market is now asking for concrete signs of de-escalation, not just rhetoric,” SEB Research said in a note.

OIL DISRUPTIONS

Saudi crude exports redirected from the Strait of Hormuz to Yanbu port in the Red Sea reached 4.658 million barrels per day last week, data from analytics firm Kpler showed. That was a sharp increase from an average of 770,000 bpd in January and February.

PetroChina, Asia’s largest oil and gas producer, is operating overall as normal, its chairman said, with about 10% of its crude oil and natural gas supplies delivered via the Strait of Hormuz.     Attacks in the region, however, escalated at the weekend and damaged Oman’s Salalah terminal, while missile attacks were also reported in Kuwait and near Saudi Arabia. 

(Reporting by Siddharth Cavale in New York, Stephanie Kelly in London, Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by David Goodman, Alexander Smith, Susan Fenton and Nia Williams)