Markets were on a wild ride on March 9 with oil prices spiking to a high of $120 after US President Donald Trump said he would wipe Iran off the map if the Straits of Hormuz were not reopened, only to fall to $85 by the end of the day after the US president suggested the war was “pretty much over.”

Trump was sending mixed messages as the war goes into its second week. On the one hand the US is scaling up its military assault on the country, while on the other making back-channel approaches to Tehran to see if there is any interested in starting negotiations.

Trump said the US had inflicted serious damage on Iran's military and predicted the conflict would end before the initial four-week time frame, although he has not defined what victory would look like.

“I think the war is practically finished. They have no navy, no communications, no air force. Their missiles have been blown to pieces. Their drones are being destroyed everywhere, including the production of drones. If you look at it, they have nothing left. Militarily, nothing is left,” Trump said.

In an effort to calm commodity markets, Trump has also eased sanctions on Russia oil to inject some fresh supplies that helped bring the price of oil down dramatically. However, analysts say these measures will be short lived as the bottleneck on the Straits of Hormuz remains in place and countries across the Gulf are now starting to shut down production.

If the US-Israeli conflict with Iran ended today, in the optimistic scenario it would take two weeks to restore shipping traffic in the Persian Gulf to normal and another two months to get oil production back to normal levels, the Wall Street Journal reports.

Despite Trump’s claims of military superiority, few military experts believe that the war will come to speedy end. Groups with access to cheap drones could continue wreaking havoc on shipping through the Strait of Hormuz even after the hot phase of the war ends. Like in Iraq and Afghanistan, the region will transition into an insurgency rather than a kinetic war thanks to the Iranian Revolutionary Guard Corps (IRGC) triggering its Decentralized Mosaic Defence doctrine (DMD) that has already turned Iran’s fanatical elite force into a guerilla force made up of 31 separate and autonomous cells.

At least 1,332 Iranian civilians have been killed in the first week and thousands wounded, according to Iran's ​UN ambassador.

Trump comments

One the reasons for the sharp fall in oil prices was comments made by Trump in an phone interview with CBS News journalist Weijia Jiang, saying the war is “pretty much” complete.” Traders assumed that “Trump always chickens out” (TACO) was in play again.

In typical disorienting Trump style, he also threatened massive strikes on Iran if the Straits of Hormuz were not reopened soon in a social media post earlier the same day.

“If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far. Additionally, we will take out easily destroyable targets that will make it virtually impossible for Iran to ever be built back, as a Nation, again — Death, Fire, and Fury will reign upon them — But I hope, and pray, that it does not happen! This is a gift from the United States of America to China, and all of those Nations that heavily use the Hormuz Strait. Hopefully, it is a gesture that will be greatly appreciated. Thank you for your attention to this matter! President DONALD J. Trump,” Trump said in a post on social media.

Iran's Revolutionary Guards countered that it would not allow "one litter of oil" to leave the region if attacks ​from the United States and Israel continue. "We are the ones who will determine the end of the war," a spokesperson said, Reuters reports.

The situation remains volatile and the markets have been on a rollercoaster ride. The Iran military shows no signs of backing down or being close to defeat, despite Trump’s claims Operation Epic Fury is running ahead of schedule.

The Islamic State appointed a new leader, Iran's Supreme Leader Mojtaba Khamenei on March 9, a hardliner and son of the previous Ayatollah who was assassinated on March 2, who is unlikely to backdown even in the face of significant military losses. The White House has said that any new leader needs to be approved by Trump and rejected the appointment.

In a display of loyalty to the new leader, the IRGD launched its 33 wave of attacks on March 9 called “Labbayk ya Khamenei” (“At Your Service O Khamenei.”) Brigadier General Majid Mousavi, commander of the IRGC Aerospace Force, announced: “From now on, no missile with a warhead weighing less than one tonne will be launched,” doubling the size of munitions. Iranian Foreign Minister Abbas Araghchi said in an interview with PBS that negotiating with the US is, “no longer on the table.”

“Trump is threatening to wipe Iran off the map if they don't allow oil to flow through the Strait of Hormuz, showing that he has no plan to reopen the strait or end the war,” says bne IntelliNews’ military analyst Patricia Marins. “Iran began deploying several defence systems and shot down a series of American cruise missiles, something that wasn't seen days ago. As of now, the vast majority of Iran's defence equipment remains hidden in underground facilities.”

Trump said the US will consider striking areas and groups of people in Iran that were not previously considered targets. The attacks will continue, Trump wrote, “until they surrender or, more likely, completely collapse!”

Putin call

The Kremlin said Trump also called Putin on March 9 to coordinate with the Russian leader, who is taking maximum advantage of the chaos on energy markets. As bne IntelliNews went to press on March 10 Brent was trading at around $90 but the Russian Urals blend was trading at $100. The discounts on Russian oil have disappeared completely in the last few days and Urals now enjoys a $10 premium over the benchmark Brent price of oil.

In the leaders' first telephone call ​this year, Trump and Putin discussed Russian ideas for a speedy end to the conflict in Iran, the military situation in ​Ukraine and the impact of Venezuela on the global oil market.

"I had a very good call with President ⁠Putin," Trump told a press conference, adding that Putin wanted to be helpful on Iran. "I said, 'You could be more ​helpful by getting the Ukraine-Russia war over with. That will be more helpful.'"

According to Al Jazeera the White House has attempted to open back channel talks with Tehran to launch ceasefire talks. The bureau chief in Tehran, Noureddine El-Dghir, reports from reliable sources that US President’s envoy, Steve Witkoff, has attempted to reach Iranian Foreign Minister Abbas Araghchi to test Tehran’s willingness for a ceasefire.

However, according to the sources, there is currently no Iranian interest in engaging, with another source confirming that Iran’s National Security Council has no discussion at this time regarding halting the war.

Araghchi confirmed he currently has no contact with Witkoff or Kushner, and that Iran has no reason to resume negotiations after previous diplomatic efforts were followed by military strikes.

Araghchi is furious with the US after he concluded a deal to denuclearise the country in Geneva in talks brokered by the neutral Oman on the day before Operation Epic Fury began the next day on February 28. Tehran had agreed to dilute its stockpile of enriched uranium and give up its nuclear missile ambitions. Araghchi said he was expecting to sign the deal the next day, but instead woke up to the news that the US and Isreal had launched “preventive” strikes to prevent a way they had just started.

Sanctions relief on India

To alleviate the pressure on oil prices, the US issued India with a 30-day waiver on Russian oil sanctions. Trump suggested the that he might offer Russia significant sanctions relief as part of an Iran war peace deal.

"We're also waiving certain oil-related sanctions to reduce prices. So we have sanctions on some ​countries. We're going to take those ​sanctions off until this straightens ⁠out," Trump told reporters, without identifying the countries, Reuters reports. "Then who knows, maybe we won't have to put them on; there'll be so much peace. But when the time comes, the US Navy and its partners will ​escort tankers through the Strait if needed."

The EU immediately rejected the idea of lifting the sanctions pressure on Russia. "It's important that we do not now ease the pressure on Russia and do not help Russia fill its war chest using this situation of elevated oil and gas prices right now," EU Commissioner for Economy and Productivity Valdis Dombrovskis said.

However, the available crude – about 20mn barrels stored on ships at sea before March 5 following the reduction in Indian imports in the last month -- was a “drop in the ocean” equivalent to only four days’ of Indian demand and so would be “helpful, but not a game-changer”, Nomura wrote in a research note reports the Financial Times. Analysts said access to the Russian shipments would do little to ease the hit to India which also has to pay a $10 premium to the benchmark Brent price now.

Analysts say the waiver is a short-term measure designed to calm markets. India’s strategic reserves cover about eight weeks of imports. The effect of the waiver on prices is expected to wear off very quickly.

Treasury Secretary Scott Bessent said on March 6 the US could free more Russian oil from sanctions. Russia's special presidential envoy on investment, Kirill Dmitriev, said the next day he was discussing the issue with Washington.

Kremlin foreign ⁠policy aide ​Yuri Ushakov said the discussion with Trump was "very substantial" and "likely to have practical significance ​for further work between the two countries".

Trump has been consistently soft on Russia as he has made it clear that he wants to do business with Putin. Last month, Ukrainian President Volodymyr Zelenskiy reported that there was a $12 trillion “Dmitriev package” of business deals on the table and Trump doesn’t want to queer his pitch by hitting Russia with any new restrictions.

US told its G7 partners that Russia sanctions relief would be temporary as it reacts to spiking energy prices amid the war in Iran, the European Union’s economy chief said. The assurances came Monday during a call of G-7 finance ministers, held shortly after the Trump administration granted India a waiver to buy Russian oil held at sea.

Europe in crisis

Putin has taken full advantage of the chaos on the energy markets. In a press conference Putin said that Russia will not “wait for the door to be shut in our face.”

Ahead of a total ban the first restrictions on oil and gas imports from Russia are about to go into effect. The EU’s Regulation 2026/261 bans short-term Russian LNG contracts from April 25. Long-term LNG imports is banned from January 1, 2027. Pipeline gas by 30 September 2027.

Despite Europe’s tough talk, it remains hooked on Russian gas – a dependency that will now increase after Qatar’s LNG has effectively been taken off the market. Just nine months before a full European Union ban on Russian liquefied natural gas (LNG) is scheduled to take effect, EU buyers purchased every cargo from Russia’s Yamal LNG project in February, highlighting a stark disconnect between policy intentions and market realities, The Guardian reports.

He told Prime Minister Narendra Modi this week that Russia would no longer offer deep discounts on oil. He told Trump that he was willing to restart gas deliveries to Europe, but only, “if they wanted to return ​to long-term cooperation,” hinting the EU would have to sign off on long-term supply contracts – something that will be anathema to Brussels.

This week Putin ordered the government to cut off gas deliveries to the EU in a move that will only deepen an unfolding gas crisis after gas prices also spiked in the last week. Deputy Prime Minister Novak confirmed that the Kremlin is already in LNG redirection talks with China, India, Thailand, and the Philippines. Contracts are expected to be signed soon.

Europe built its energy independence from Russia over four years. It diversified to Norwegian pipeline gas, American LNG, and Qatari LNG. Two of those three sources now face disruption.

Europe remains especially vulnerable to higher prices, as its gas storage facilities are significantly depleted following an unusually cold winter. As the heating season ends, Europe’s gas storage tanks are only 30% full and Germany’s only 20% full. If the refilling of the tanks follows the historical norms, Germany will fall far short of EU’s deadline of filling tanks to 90% full by November 1 and only reach 60% according to IntelliNews Lambda calculations.

With LNG tankers on their way to Europe already turning round and re-routing to Asia, the EU is now in price competition with Asia which is heavily dependent on gas and likely to be outbid that will cause another price shock, similar to the last shock in 2022, say experts. In addition to the ballooning crisis in Germany, In the UK saw natural gas reserves fall to critically levels last week, with only two days' worth of fuel remaining, Reuters reports.

Hungary is also making hay from the crisis, with Hungarian Foreign Minister Péter Szijjártó calling on the EU to immediately lift the ban on Russian oil and gas imports completely. An EU delegation was in Kyiv last week to float the idea of reopening the Druzhba pipeline and temporarily restart the delivery of Russian piped oil and gas for the duration of the crisis. Zelenskiy reportedly rejected the idea.

Cost of the Iran war

One week of the Middle East conflict has already cost the US $6bn, concerning some Congressmen at the escalating cost of the war is running at an estimated $100bn a year in the run up to key midterm elections in November. Domestic fuel prices are also soaring, which is traditionally a major political problem for a sitting president.

Republicans expect the administration to ask Congress for additional funding, the NYT notes. Approximately $4bn of the first week's total was spent on ammunition, primarily on interceptor missiles used to shoot down Iranian missiles.

Estimates from the Center for Strategic and International Studies (CSIS) indicate that the first 100 hours of the US military operation in Iran cost $3.72bn, averaging roughly $891.4mn per day.