Oil prices surge 5% after Trump vows to hit Iran
What's the story
Oil prices surged in volatile trading after US President Donald Trump warned of further military action against Iran within the next few weeks. The warning has dashed hopes for a quick de-escalation in the ongoing conflict. West Texas Intermediate crude futures for May rose by 4.1% to $104.21 a barrel, while international benchmark Brent crude futures for June jumped by 5% to $106.42 per barrel at 9:45pm ET on Wednesday.
Accusation
Trump vows to hit Iran 'extremely hard' in coming weeks
In his speech, Trump blamed the Iranian regime for launching "deranged terror attacks against commercial oil tankers and neighboring countries that have nothing to do with the conflict." "We're going to hit them extremely hard over the next two to three weeks," he said. Despite his aggressive stance, Trump hinted at a possible diplomatic resolution by saying discussions with Tehran are ongoing.
Market reaction
Experts warn of risk-off sentiment as investors await clarity
George Efstathopoulos, portfolio manager at Fidelity International, told CNBC that the markets were expecting a "binary outcome" from Trump's speech. He said it could either indicate plans for a war exit or further escalation and prolonged uncertainty. Efstathopoulos expects this speech will fuel risk-off sentiment as investors await clarity on the situation. Giles Alston, political risk analyst at Oxford Analytica, said oil tanker traffic through the Strait of Hormuz is unlikely to resume anytime soon due to these tensions.
Denial
Iran denied ceasefire request claim by Trump
Earlier on Wednesday, Trump claimed on Truth Social that Iran had requested a ceasefire. However, the Islamic Republic denied Trump's claim and said the waterway would not be reopened based on his "absurd displays." The key transit route remains "decisively and dominantly under the control of the IRGC Navy," according to Iran.