Oil Falls Ahead of Trump's Iran War Speech
Oil prices fell in a volatile session, with traders focused on whether US President Donald Trump would soon declare an end to the war with Iran.
Brent briefly fell below $100 per barrel, even dropping more than 5%, before recovering most of those losses and trading around $103. Trump, in a post on Truth Social, explained that Tehran had requested a ceasefire and that the US would consider one if the Strait of Hormuz were reopened. Previously, Trump had said the US might withdraw from Iran within two to three weeks and added that a deal with Tehran was possible, although not a prerequisite for ending the conflict.
Oil prices are currently around 40% higher than they were before March, as the war continues to disrupt oil flows through Hormuz, which carries about a fifth of the world's oil supply. The International Energy Agency (IEA) has described this as the largest supply disruption ever. The surge in market volatility has led to increasingly volatile intraday trading, with many traders forced to reduce their position sizes.
However, if the US withdraws, it remains unclear when shipping through the Strait of Hormuz will return to normal, and Trump has repeatedly stated that US allies must help secure the strait. Despite signs of easing tensions, attacks on tankers continue to occur. An oil tanker was reportedly attacked near Qatar on Wednesday, with a British naval group reporting a fire that was extinguished, but no environmental damage was reported.
Cause:
Tensions in the Strait of Hormuz due to the war between the US, Israel, and Iran have caused significant disruptions to global oil flows. The closure of the strait has triggered a spike in energy prices and inflation concerns worldwide. Trump has signaled that tensions could ease if Iran agrees to the terms offered by the US.
Effect:
If the war continues or escalates, oil prices could continue to rise, with a significant impact on global inflation. Fuel prices in the US have already soared, further putting pressure on the domestic economy. These tensions have also exacerbated uncertainty in energy and financial markets.
Source: Newsmaker.id
