Oil Prices Surge 7% Following Trump's Announcement of Continued Iran Attacks
Oil prices experienced a sharp increase of nearly 7% on Thursday, driven by President Donald Trump's declaration that the United States will persist with attacks on Iran. This statement has intensified fears of extended disruptions to global oil supplies, particularly through the critical Strait of Hormuz.
Market Reaction and Price Movements
Brent crude futures rose by $7.65, or 7.6%, reaching $108.81 per barrel at 0902 GMT. Similarly, U.S. West Texas Intermediate crude futures increased by $7.06, or 7.1%, to $107.18 per barrel. Both benchmarks are on track for their most significant daily gains in both absolute and percentage terms over the past three weeks. However, prices remain below the peaks above $119 per barrel observed earlier in the conflict.
The gains followed earlier losses of more than $1 in both contracts prior to Trump's televised address to the nation. In his speech, Trump emphasized a hardline stance, stating, "We're going to hit them extremely hard over the next two to three weeks. We're going to bring them back to the Stone Ages where they belong." Notably, he provided no specifics on measures to potentially reopen the Strait of Hormuz, a vital maritime chokepoint for oil shipments.
Analyst Insights and Geopolitical Tensions
Priyanka Sachdeva, a senior market analyst at Phillip Nova, highlighted that markets are reacting to the lack of any "clear mention of ceasefire or diplomatic engagement" in Trump's speech. She warned, "If tensions intensify or maritime risks increase, oil could test fresh highs as markets price in potential supply disruptions."
Threats to maritime traffic have escalated as the conflict deepens. On Wednesday, Qatar's defence ministry reported that an oil tanker leased to QatarEnergy was struck by an Iranian cruise missile in Qatari waters. This incident underscores the growing risks in the region.
Supply Chain Disruptions and Economic Implications
Some market participants have ceased dealing with cargoes priced off the Dubai Middle East benchmark, which typically values nearly one-fifth of global crude supply. This move is due to the inability to use ports inside the Strait of Hormuz, further complicating oil logistics.
The head of the International Energy Agency issued a warning that supply disruptions are expected to begin impacting Europe's economy in April. Previously, the region had been shielded by cargoes contracted before the war's onset.
In a note, Rystad emphasized, "The next critical signal for markets lies in Iran's response and that of the international community, whether President Trump's pressure will yield action to secure the Strait, which has not yet materialized." This uncertainty continues to fuel market volatility and concerns over sustained high oil prices.
