Oil Prices Surge as Trump Warns of Escalated Iran Conflict

Oil prices experienced a significant rise as U.S. President Donald Trump issued a warning of further military aggression against Iran, projecting that the conflict could last another two to three weeks. This statement has dampened expectations for a quick de-escalation in the ongoing tensions. U.S. West Texas Intermediate crude futures for May increased by 4.76% to $104.89 a barrel, while June futures for Brent crude rose 5.7% to $106.96 per barrel. Trump attributed the surge in oil prices to Iran's alleged involvement in terror attacks against commercial oil tankers and neighboring countries. He emphasized the U.S. intention to take 'extremely hard' actions against Iran, although he also mentioned that discussions with Tehran are ongoing, suggesting a potential diplomatic resolution. Portfolio manager George Efstathopoulos from Fidelity International noted that markets anticipated a 'binary outcome' from Trump's speech, either a signal for a war exit or further escalation, with the latter now appearing more likely. Analysts predict that this could exacerbate the risk-off sentiment as investors await clarity. The Strait of Hormuz, a critical route for global oil and gas flows, has seen a near-complete halt in traffic since the U.S.-Israel war against Iran began on February 28, contributing to a severe energy crisis. Political risk analyst Giles Alston from Oxford Analytica indicated that the resumption of oil tanker traffic through the Strait is unlikely in the near future, with the U.S. position on the issue becoming increasingly ambiguous. Trump's recent comments on Truth Social suggested that Iran had requested a ceasefire, which briefly lowered oil prices, but the Islamic Republic has denied these claims, asserting that the Strait remains under its control. The conflicting statements from both sides regarding the status of peace talks have added to the uncertainty, with Trump sending mixed signals about the potential for a negotiated deal and the possibility of escalating military operations in the region.