Daily headline-grabbing remarks by US President Donald Trump are prompting swift reactions from market speculators and driving short-term volatility in oil prices. Yet the underlying causes of a widening global energy crisis continue to intensify. Tight oil and gas supplies are fuelling instability worldwide, with knock-on effects for food markets, fertiliser production and air travel. Iran’s push to challenge the dollar’s dominance in oil trade may also gain momentum. In Russia, plans for budget austerity have already been put on hold amid the prospect of a prolonged global energy crunch.
Comments by US President Donald Trump on the start of peace talks with Iran, denied by Tehran, sent oil futures plunging by nearly $20 a barrel.
By Tuesday, speculative pressure had eased, with ‘paper oil’ prices recovering to between $98 and $100 per barrel for Brent crude. The rebound comes as several countries begin co-ordinated releases from their strategic petroleum reserves
US authorities have begun releasing between 1 million and 1.5 million barrels per day from strategic reserves, with plans to ramp this up to as much as 3m barrels per day, US Energy Secretary Chris Wright said. Japan’s prime minister, Sanae Takaichi, also announced on Tuesday that Tokyo would start drawing on national reserves from March 26. Officials estimate the stockpiles would last for roughly one month. Washington hopes that co-ordinated releases across several countries will help curb speculative activity in oil markets. However, tackling the underlying causes of the global energy crisis is likely to prove far more difficult.
Oil company executives are warning of lasting damage from the conflict with Iran and urging policymakers not to underestimate a crisis that is not fully reflected in ‘paper oil’ futures. Chevron chief executive Mike Wirth said any disruption to shipping routes has real, physical consequences for the global energy system, even if these are not yet visible in price curves. He added that trading is being driven by ‘limited information’, while underlying supply constraints are far tighter than futures markets suggest.
Oil company executives are warning of lasting damage from the conflict with Iran and urging policymakers not to underestimate a crisis that is not fully reflected in ‘paper oil’ futures. Chevron chief executive Mike Wirth said any disruption to shipping routes has real, physical consequences for the global energy system, even if these are not yet visible in price curves. He added that trading is being driven by ‘limited information’, while underlying supply constraints are far tighter than futures markets suggest.
Russian oil producers have raised wholesale petrol prices on the exchange by 12% to 15% following the outbreak of war in Iran. Source: the St Petersburg International Mercantile Exchange.
‘The impact extends beyond higher energy prices and will ripple through other supply chains,’ warned TotalEnergies chief executive Patrick Pouyanné. The release of strategic reserves has so far failed to stabilise markets, according to Takehiko Matsuo, Japan’s deputy foreign minister.
‘Rising oil prices are driving up the cost of living and weighing on economic growth worldwide. From factories and farms to households, the human cost is rising by the day,’ said Sultan Ahmed Al Jaber, head of the Abu Dhabi National Oil Company. If oil reaches $120 per barrel, the world could face a sharp drop in demand, warned Ben Marshall, chief executive of Vitol Americas.
Energy shortages pose a significant risk of higher global food prices, while disruptions to fertiliser supplies could further worsen the outlook, warned Julie Kozack, a spokesperson for the International Monetary Fund (IMF).
Rising oil prices are already forcing airlines to revise their plans amid tightening aviation fuel supplies. Several Vietnamese carriers are cancelling domestic flights due to fuel shortages and surging costs, Bloomberg reported. Airlines worldwide are also drawing up contingency plans in case aviation fuel supplies are disrupted. According to the Financial Times, carriers have been unable to secure guarantees that they will be able to refuel aircraft beyond April 2026.
Russian oil companies are not facing fuel shortages on the domestic market, but they are moving to capitalise on the conflict in the Middle East. Exchange-traded petrol prices have risen by 12% to 15%, depending on the grade, following the Israeli-American military action against Iran. On Tuesday, wholesale prices for AI-95 petrol in European Russia rose by a further 1.5%, while AI-92 gained 1.3% over the course of the day.
Russia’s budget stands to benefit from higher global prices. Officials in Moscow increasingly appear to view the current energy crisis as a longer-term trend. Against this backdrop, previously announced plans by the Finance Ministry to tighten spending and revise the fiscal rule have been put on hold.
The Finance Ministry said on Tuesday that it would not tighten the fiscal rule this year and that any revisions could come only from 2027, according to Deputy Finance Minister Vladimir Kolychev. All proposed changes to the budget framework, he said, are aimed at the medium to long term and designed to keep the federal budget balanced even at lower oil prices.
On the eve of the Israeli and US strike on Iran, Finance Minister Anton Siluanov said the government was considering tightening the fiscal rule by lowering the baseline oil price amid a shortfall in oil and gas revenues. At the time, he said a decision could be finalised within ‘a couple of weeks’. A month on, however, no revised framework has been announced. Shortly after Siluanov’s comments, the Finance Ministry said it would suspend the purchase and sale of foreign currency and gold on the domestic market in March, citing planned changes to the baseline oil price under the fiscal rule. According to Kolychev, a final decision on revising the rule is expected before the drafting of the next three-year budget
Original: NG/Война в заливе добралась до российского бюджета
