Oil prices surge after Trump hints at prolonged Middle East turmoil

Brent crude’s price has rallied after US President Donald Trump said Washington will press ahead with its military operations against Iran, including possible strikes on energy facilities.

IMAGE: Getty Images

In a national address from the White House, Trump called on countries reliant on oil shipments through the Strait of Hormuz to “take care of the passage".

Trump said the US will continue to hit Iran “extremely hard” over the next two to three weeks and possibly target “each and every one” of its power plants.

Ahead of Trump’s speech, Brent’s price moved lower on hopes of easing tensions in the Middle East, before rebounding sharply on his indication that the conflict would continue.

Trump also said the conflict would be brought to a swift end, though he offered no timeline for a ceasefire agreement. For the oil market, Trump’s remarks are seen as a threat of further escalation, analysts said.

“Oil rebounded sharply… as US President Donald Trump threatened a further escalation of the war with Iran, injecting fresh uncertainty into energy markets,” two analysts from ING Bank noted.

Meanwhile, Iran’s parliament approved a plan to collect tolls from shipowners for vessels transiting the Strait of Hormuz, the Wall Street Journal reported citing Iranian state media. The state media has not disclosed the toll fees.

The de-facto closure of the critical waterway has affected about 20% of the global seaborne oil flows. Vessels linked to the US, Israel and their allies will not be allowed to pass under the new plan, the WSJ report added.

“Even if shipping through the Strait of Hormuz resumes, a return to pre‑war market conditions is likely to be slow,” ING Bank’s analysts added.

Amazon’s cloud computing unit Amazon Web Services’ (AWS) office in Bahrain was hit by an Iranian strike yesterday, the Financial Times (FT) reported.

The news comes a day after Iran threatened to target US companies operating in the Middle East. Tehran named 18 global companies – like Google, Apple, Intel, Microsoft and more – as their legitimate targets.

“Key message for oil market: “Extremely hard” hits on Iran coming if no deal reached,” remarked VANDA Insights’ founder Vandana Hari.

By Aparupa Mazumder

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