Trump's Iran War Timeline Raises Concerns Over Oil Demand Destruction

U.S. President Donald Trump has asserted that the war with Iran will conclude within two to three weeks, during which U.S. forces will intensify their military actions against Iran. However, the ongoing conflict has already triggered a dramatic rise in oil prices, with global benchmark Brent crude surging over 60% in March. The war, which began with U.S. and Israeli strikes on Iran on February 28, has led to the closure of the Strait of Hormuz, a critical shipping route, exacerbating fears of supply disruptions. Analysts remain skeptical about the timeline, noting that the conflict's duration and its impact on oil supply and demand could extend beyond Trump's projections. In the wake of Trump's recent speech, oil prices continued to climb, with Brent crude trading above $107.79 per barrel and U.S. West Texas Intermediate crude reaching over $106 a barrel. The prolonged conflict could result in demand destruction, where high prices or limited supply lead to a sustained drop in oil consumption. Goldman Sachs analysts highlighted that markets with flexible pricing, such as the U.S., and emerging economies like South Africa, the Philippines, Malaysia, and Vietnam, may see significant reductions in gasoline and diesel demand. Additionally, signs of demand destruction have already emerged in sectors like aviation and Asian petrochemical industries. European Central Bank chief Christine Lagarde has cautioned that market expectations for a swift recovery in oil supply are overly optimistic, warning that the Gulf's lost energy capacity may take years to restore. Energy analyst Scott Shelton of TP ICAP estimated that the war has already caused a loss of around 500 million barrels of crude oil and refined products, depleting pre-war storage buffers. Shelton emphasized that if the conflict extends beyond Trump's projected timeline, the market may face demand destruction levels by mid to late April. The situation remains fluid as Trump has paused U.S. attacks on Iranian energy facilities until April 6, adding uncertainty to the timeline and potential market impact.