Oil Prices Climb on Iran Conflict Concerns

Oil prices experienced a significant increase on Thursday as heightened tensions between the United States and Iran sparked fears of further escalation. Simultaneously, stock markets saw declines, reversing earlier gains from the week.

Benchmark Prices Surge

Brent crude, the global oil benchmark, rose by 7.4% in early trading, exceeding $108 a barrel. WTI, the US benchmark, also climbed 7% to reach $107 a barrel. South Korea’s Kospi index led losses in Asia, closing down 4.5%.

Trump's Remarks Fuel Uncertainty

Market sentiment “deteriorated overnight” following a televised address by US President Donald Trump, according to Deutsche Bank analysts. The address lacked clarity regarding potential timelines or conditions for ending hostilities against Iran. Analysts noted there was “no signal of the US seeking an imminent offramp out of the war.”

Conflicting Statements and Threats

Speaking from the White House on Wednesday, President Trump stated the conflict with Iran was “nearing completion” while also threatening to “hit Iran extremely hard over the next two to three weeks.” In response, Tehran threatened “more extensive and destructive actions.”

Strait of Hormuz Concerns

President Trump also renewed threats to bomb Iranian power plants if US demands were not met. He signaled a willingness to end the conflict without guaranteeing the restoration of shipping through the Strait of Hormuz, suggesting countries reliant on the waterway should handle that issue. He stated the United States, a major oil producer, does not require oil from the strait.

Global Oil Market Impact

While the US is less vulnerable to oil supply disruptions than Asia and Europe, it still imports specific types of oil and remains exposed to global price fluctuations. Even after the conflict ends, a full return to normal shipping levels in the Strait of Hormuz will take time.

Resumption of Shipping

Claudio Galimberti, chief economist at Rystad, noted that while flows could resume within days, returning to around 20 million barrels per day is “likely to take several weeks.” Resumption also depends on security assurances and insurance coverage.

Ongoing Conflict and Regional Threats

The conflict continues in the Middle East, with Iran firing missiles at Israel early Thursday. Abu Dhabi reported successfully intercepting a missile near an industrial area. The US embassy in Iraq warned of potential attacks by Iran-aligned militant groups in Baghdad within the next 24-48 hours, advising Americans to depart the country.