Trump Sends "Armada" to Iran, Oil Prices Immediately Surge
Oil prices rose in Asian trading on Friday after US President Donald Trump signaled the possibility of military action against Iran. This statement immediately sparked market concerns about supply disruptions in the Middle East—a region that is the main artery of the world's energy supply.
Despite being hit in recent sessions, oil prices are still heading for a fifth consecutive week of gains. The market believes demand has the potential to improve, while risk premiums have also risen due to escalating global geopolitical tensions.
Trump delivered the warning while speaking to reporters aboard Air Force One. He said the US has an "armada" heading toward Iran and urged Tehran not to take any actions that could lead to escalation, including cracking down on protesters or reviving its nuclear program. His tone was clear: the US is "watching very closely" and that force remains on the table.
Reports indicate an aircraft carrier and several destroyers will arrive in the Middle East in the coming days. This has revived the image of a military confrontation in the region—and the oil market typically reacts quickly to potential supply disruptions.
Market concerns are well-founded, as Iran is one of the largest oil producers in OPEC and a key supplier to China, the world's largest oil importer. If the US were to take military action, the risk of disruption to Iranian exports would immediately ripple through the global supply chain and push prices higher.
Oil prices experienced a "whipsaw" this week—sharp fluctuations—as the market digested the US's shift in stance regarding Greenland. However, amidst this uncertainty, oil prices remained positive and continued to gather strength to close the week higher.
Sentiment was also supported by fundamental demand factors. Positive Chinese economic growth data provided hope for continued energy consumption, coupled with signals from global energy agencies raising demand projections for 2026. After a disappointing 2025, some investors also saw oil prices as attractive for bargain buying.
Furthermore, a weakening dollar helped oil because the commodity is traded in dollars—when the dollar falls, oil typically feels cheaper to buyers outside the US. The market also still believes the Fed has the potential to cut interest rates this year, which typically supports risk assets and commodities through liquidity sentiment.
5 key points:
- Oil prices rose after Trump signaled potential military action against Iran.
- Market concerns about Middle East supply disruptions have raised risk premiums.
- Oil has the potential to rise for a fifth consecutive week, despite initial volatility.
- Iran is a major OPEC producer and a key supplier to China—the risk of export disruptions could push up prices.
- Other supporting factors: positive Chinese data, improved 2026 demand projections, and a weakening dollar due to expectations of a Fed interest rate cut. (asd)
Source: Newsmaker.id
