West Texas Intermediate (WTI) crude oil surged 12.79% on Wednesday, April 1, to $112.93 a barrel, after US President Donald Trump’s speech disappointed investors who had hoped for a swift end to the Iran nuclear deal.
At 9:00 a.m. local time (1:00 p.m. GMT), WTI futures contracts, the benchmark crude used in the US, were up $12.81 from the previous day’s close.
In a speech delivered late Wednesday, the US president stated that he was still seeking a diplomatic agreement to end the conflict and that he would complete his military objectives in Iran in about “two or three weeks.”
However, he also vowed to attack Iran “with extreme force” in the coming weeks and reduce the country “to the Stone Age,” in a speech that made no mention of deploying troops on the ground or providing any further concrete details after more than a month of hostilities.
The lack of a clear timeline dampened investors’ hopes that the war could reach a swift conclusion and that the Strait of Hormuz—through which a fifth of the world’s oil and natural gas supply flows—could reopen soon, allowing oil to once again flow freely from the Persian Gulf to global markets.
Tom Essaye indicates today in his Sevens Report that the war in the Middle East and its impact on global physical markets remain the primary catalyst.
“Until there is clarity regarding a ceasefire – and, ultimately, the reopening of the Strait of Hormuz to tanker traffic – an upward dynamic driven by fear will persist in the oil market (as we are observing this morning, with crude prices rebounding to near multi-week highs),” Essaye notes.
