US President Donald Trump gave a speech on Thursday. Only after his speech, there was an increase in both Brent crude and WTI oils. Where oil prices had fallen below $100 last Wednesday. At the same time, today it again increased by about 4 percent to 105 dollars. Brent crude reached $105 and WTI went to $103.
A sharp rise was seen in oil prices on Thursday. Donald Trump’s address to the nation did not completely ease investors’ concerns, especially as there was no clear indication of the end of the crisis on the Strait of Hormuz. He appealed to other countries for help in reopening it, due to which Brent crude rose more than 4% to $ 105.55 per barrel, while West Texas Intermediate (WTI) rose 3% to $ 103.16. Before the speech there was a decline in the prices of both.
The rally came after Trump warned of tough measures against Iran, including attacks on electrical infrastructure, and linked the ongoing attacks to an escalation of the conflict. There is confusion in the markets due to continued tension around the Strait of Hormuz. This strait is an important route for about 20% of the world’s oil supply, which has been largely affected since the fighting started on February 28.
Dangers to maritime traffic
As fighting increases in the region, threats to maritime traffic are also increasing. Recently on Wednesday, according to Qatar’s Defense Ministry, an oil tanker leased to Qatar Energy was attacked by an Iranian cruise missile in Qatar’s territorial waters. Meanwhile, some investors say that even if the war ends within the deadline set by Trump, it will take time for oil supplies to return to normal, especially given the damage to energy infrastructure. Trump’s team has also said that reopening the Strait of Hormuz, which supplies about 20% of the world’s crude oil, may not be necessary to end the war.
Tiffany Wilding, economist at Pacific Investment Management Company, told Bloomberg that the economic damage caused to the global economy due to the Iran conflict is increasing every week. He further said that continued disruptions could gradually increase economic pressure, which could ultimately lead to a recession for the global economy.
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