Morning Brief: Oil Crashes 6% on Iran Peace Hopes — But the Real Supply Picture Tells a Different Story

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Brent front-month futures last closed at $95.56 and WTI at $88.34 per Yahoo Finance as of 25 March 2026 13:06 UTC, with both benchmarks extending steep overnight losses into the US open as diplomatic optimism over the Iran conflict drove the session's dominant price narrative. Brent fell as much as 7% toward $97 before paring some losses, while WTI traded near $88, as President Trump voiced confidence that Iran "wants to make a deal so badly" and Iran announced it would permit "non-hostile" vessels through the Strait of Hormuz per Yahoo Finance as of 25 March 10:50 UTC. Brent shed more than $6.26 to $93.97 and WTI lost $5.63 to $86.72 at one point during early trading — a roughly 6% decline — with Trump's 15-point ceasefire plan and a postponed deadline to strike Iranian power plants cited as the key catalysts per AP News as of 25 March 09:43 UTC.

Iran's foreign ministry and officials have disputed the diplomatic narrative, calling reports of ongoing negotiations "fake news" and reaffirming a hardline stance — introducing sharp uncertainty about whether today's price declines are durable per BBC as of 25 March 07:52 UTC. Vanda Insights warned that oil markets are overpricing the possibility of a swift resolution, arguing Iran remains focused on keeping the Strait of Hormuz closed rather than pursuing quick conflict resolution per CNBC as of 25 March 07:31 UTC. Even an immediate ceasefire would require three to five months for oil markets to normalise, given the need to repair facilities, clear mines, and resolve a logistical crisis involving approximately 2,000 stranded ships in the Persian Gulf per EL PAÍS English as of 25 March 09:30 UTC.

Overnight, Ukraine struck Russia's Ust-Luga oil export terminal on the Baltic Sea in what was described as the largest drone attack of the year, setting the facility on fire; Ust-Luga had already been shut down following earlier attacks this week, and the nearby Primorsk port was also targeted per The Moscow Times as of 25 March 08:58 UTC. Ust-Luga handles approximately 450,000 barrels of crude oil daily, representing more than a third of Russia's oil tanker exports westward per Newsweek as of 25 March 10:23 UTC. Separately, a Russian oil tanker carrying approximately 730,000 barrels of crude is en route to Cuba with Russian military escort through the English Channel, adding a further geopolitical dimension to global supply flows per E&E News by POLITICO as of 25 March 10:30 UTC.