In the early morning of March 10 Beijing time, the international crude oil market experienced an unprecedented sharp volatility. Both WTI crude oil and Brent crude oil staged a “roller coaster” trend, with an intraday amplitude of over 40%, setting the largest single-day fluctuation record in many years.
In the morning session, affected by the sudden escalation of the Middle East situation and rumors of blocked shipping in the Strait of Hormuz, market panic surged sharply. WTI crude oil futures once soared by more than 30%, breaking through the integer mark of $120 per barrel; Brent crude oil surged synchronously, reaching a high of $118 per barrel, both refreshing the highest level in nearly three years. The market is worried that about 20% of the global oil supply channel will be cut off, and an energy supply crisis is imminent. The International Energy Agency (IEA) urgently warned that the global energy market is facing the most severe supply shock since 2014.
However, the situation took a dramatic turn in the afternoon. US President Trump issued an emergency statement, saying that the military operation against Iran “has basically ended” and revealed that he is considering taking over the Strait of Hormuz to ensure shipping safety. As soon as this statement was released, market panic dissipated instantly, and crude oil prices plummeted from a high. WTI crude oil fell nearly 30% from the intraday high, touching around $86 per barrel; Brent crude oil also dropped sharply, falling below the $90 per barrel mark. By the close of trading on the day, WTI crude oil closed at $94.77 per barrel, up 4.26%; Brent crude oil closed at $98.32 per barrel, up 3.89%, barely closing positive after the intraday sharp fluctuation.
The extreme volatility of oil prices this time not only severely hit the energy derivatives market but also triggered a chain reaction in the global financial market. Stock markets, foreign exchange markets, and bond markets all experienced sharp fluctuations. Market concerns about the re-emergence of inflation have intensified, and the monetary policy prospects of central banks around the world have thus been overshadowed.
