Oil Prices Jump and Shares Drop After Trump Threatens More Iran Strikes

Oil Prices Jump and Shares Drop After Trump Threatens More Iran Strikes

Oil prices began climbing again after US President Donald Trump reiterated threats to hit Iran "extremely hard" in the coming weeks and failed to provide concrete details on how the war will end.

Brent crude briefly surged past $109 per barrel, and stock markets in the United States, Europe, and Asia fell following Trump's address from the White House. He stated that the US would complete its strategic objectives for the war "very shortly" and spend the next two to three weeks bombing Iran "back to the Stone Ages."

Earlier on the same day, oil prices had dipped below $100 ahead of the speech on hopes that Trump would outline how the US would exit the conflict. However, his address largely repeated points he had made previously.

Impact of the Iran War on Global Energy Supplies

The Iran war has severely disrupted global oil and gas supplies. Oil shipments through the critical Strait of Hormuz waterway have mostly been halted after Iran threatened to attack tankers that try to cross in retaliation for US-Israeli strikes, which began on 28 February.

In his speech, Trump said the US did not need the Middle East's energy and urged other nations to step in to free up shipments from the Gulf that have been disrupted as a result of the war. He stated: "To those countries that can't get fuel, many of which refuse to get involved in the decapitation of Iran… build up some delayed courage, go to the Strait and just take it."

Market Reactions

Oil prices, which had been fluctuating incrementally before the speech, shot upwards moments after the televised address. Brent crude, the global benchmark, rose more than 8 percent before retreating slightly.

The US benchmark, West Texas Intermediate, which had been somewhat shielded from price rises earlier in the conflict compared with Brent, also took off, briefly trading above $110 per barrel in Thursday morning trade in New York before dropping back.

According to the founder and managing director of an oil and gas consultancy, the rise represented a "clear market reality check following the earlier optimism for an imminent ceasefire." He noted that Trump's speech lacked a "concrete timeline" for the reopening of the Strait of Hormuz, adding that a return to normal now looks "months away rather than weeks." In urging other nations to step in, Trump removed hopes that disruptions to global energy supplies would be resolved swiftly, he added.

Recovery Timelines and Infrastructure Damage

In his speech, Trump said oil and gas flows would return quickly when the war ended, stating: "When this conflict is over, the strait will open up naturally. It will just open up naturally."

However, a former head of gas analysis at a major oil company suggested it could take some time for flows to return to normal. The Gulf's energy infrastructure has been damaged following strikes by Iran, Israel, and the United States, and repairing it could take between three and five years.

Speaking to a BBC program, she explained that disruption to traffic through the Strait of Hormuz was likely to persist and that additional costs in the form of fees to use the strait could be "quite substantial." She noted that currently ships were subject to a charge in the region of $2 million for using the strait, which, if made permanent, amounted to "the worst-case solution" for users of the waterway.

Stock Market Performance

In the United States, the S&P 500 and Nasdaq closed slightly higher, up 0.1 percent and 0.2 percent respectively after earlier losses. The Dow Jones Industrial Average ended trading down 0.1 percent.

In the United Kingdom, the FTSE 100 index fell in early afternoon trade but closed 0.69 percent higher. France's CAC index closed down 0.24 percent, and Germany's DAX closed down 0.79 percent, with both regaining some earlier falls.

In Asia, major stock indexes fell after Trump's address, reversing earlier gains. Japan's Nikkei 225 closed down 2.4 percent, and South Korea's Kospi ended 4.5 percent lower. The region's stock markets have been volatile since the Iran war began. Asia is particularly vulnerable to the impact of the conflict as it is heavily reliant on the Middle East for its energy supplies.