Birol warns that the real crunch will begin this month: File Image/Pixabay

Hopes that the U.S./Iran war may end sooner than later, stoked on Wednesday by media reports and a statement from the White House that negotiations are taking place, caused oil to tumble, with Brent briefly falling to $98.35 before ending down 2.8 percent at around $101 per barrel.

West Texas Intermediate fell 1.2 percent to $100 per barrel.

While hawks warned that the plea wasn’t to be trusted, U.S. president Donald Trump said Iran had asked for a ceasefire, something he claimed would only happen if the Strait of Hormuz was re-opened; earlier he had suggested that such a re-opening may not be necessary to end hostilities, nor would it even require a formal agreement.

However, Trump’s message about the war’s timeline has been consistent, and he reiterated his position by stating, "Now we’re finishing the job…I think in two weeks or maybe a few days longer, we’ll do the job; we want to knock out everything they’ve got."

Meanwhile, Fatih Birol, executive director of the International Energy Agency, warned that “The next month, April, will be much worse than March” with regards to the oil supply crunch caused by Iran closing the Hormuz.

Birol explained that in March there were already some cargo ships carrying oil and gas that transited through the Strait, but “In April, there is nothing…the loss of oil in April will be twice the loss of oil in March; on top of that you have LNG and others.

“It will come through to inflation, I think it will cut economic growth in many countries, especially emerging economies; in many countries the rationing of energy may be coming soon.”

Birol also compared current oil losses to those in the 1970s: “When you look at the [1973 and 1979], in both of them we lost each about 5 million barrels per day of oil, [and] these crises led to global recession in many countries…..today, we lost 12 million barrels per day — more than two of these oil crises put together.”

The IEA is considering another release of its strategic oil reserves.

As for the war itself, Iran on Wednesday hit an oil tanker off the coast of Qatar and Kuwait's airport, while airstrikes battered Tehran.

In other oil news on Wednesday, the Philippines, one of Asia’s nations worst affected by the supply squeeze, imported its first cargo of Russia’s Far Eastern crude grade ESPO for the first time in six years.

Also on Wednesday, Dan Jørgensen, the European Union's European commissioner for energy and housing, warned that should the war end tomorrow, oil and gas prices would not return to pre-war levels.

He said, “While there are no immediate oil and gas supply shortages for in the European Union, we see tightening in certain product markets, notably diesel and jet fuel, as well as increasing constraints in global gas market and its spill-over effects into electricity prices.”