On Monday, oil rose again after new remarks from Donald Trump about Iran. He stated that Tehran is running out of time for negotiations.
“The clock is ticking for Iran, and they better hurry, or there will be nothing left of them. TIME IS RUNNING OUT!” Trump wrote on Truth Social.
After this, Brent oil rose by almost 2% to $111.42 per barrel. WTI climbed even higher, up 2.43% to $107.98. For American oil, this is the highest level in a month.
Trump Keeps Pressure on Iran as Market Watches Strait of Hormuz
Talks between the U.S. and Iran are still stalled. The main issue now is the situation around the Strait of Hormuz.
Formally, the parties agreed to a truce back in April, but the strait has not been fully reopened. At the same time, the U.S. continues to pressure Iran through restrictions on ports and shipments.
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This is already clearly visible in the oil market. Since the beginning of the year, Brent has risen by 74%, although it has not yet reached the April high of $118 per barrel.
Right now, the market is primarily watching the Strait of Hormuz. A huge volume of oil passes through it, so any news about the route immediately affects prices.
Last week, the International Energy Agency reported that global oil reserves continue to decline. The market is pressured by supply disruptions and high demand.
The IEA believes that if the situation with the strait drags on, oil could become even more expensive. Especially closer to summer, when fuel demand usually increases.
The agency also warned that supply problems could trigger a new price spike.
The market is now reacting to news from the Middle East more nervously than before. Any escalation is quickly reflected in oil prices.
Against this backdrop, some market participants are already expecting Brent to return to April highs. Especially if there are new restrictions or supply disruptions.
The situation is also unpleasant for the crypto market. Rising oil prices are once again fueling talk of inflation, which usually hits risk assets.
Because of this, investors have become more cautious not only with crypto but also with tech stocks. Many now prefer more defensive assets.
In Asia, trading was also weak. The Australian S&P/ASX 200 fell by 1.32%, Japan’s Nikkei 225 lost 0.92%, and Topix was down 0.77%.
G7 Ministers Discuss Crisis in Paris
Against this backdrop, G7 finance ministers gathered in Paris. The main topic is clear: what will happen to the global economy if tensions in the Middle East drag on and oil continues to rise.
In South Korea, Kospi also fell at first, but by the end of the day managed to close up 1.15%. Kosdaq, which has more tech companies, on the contrary, dropped by 1.65%.
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In Hong Kong, Hang Seng lost almost 1.5%. In mainland China things were calmer: CSI 300 barely moved, Shanghai Composite slipped slightly. Taiwan’s Taiex fell by 1.02%.
U.S. futures also showed no sharp moves. Dow Jones slipped a bit, S&P 500 and Nasdaq were almost flat. Part of the market is just waiting for reports from Nvidia and major U.S. retailers.
Expensive oil is once again becoming a problem not only for traders. If fuel keeps rising, it will quickly hit transportation, manufacturing, and prices for consumers. The hardest hit will be countries dependent on energy imports.
Kyriakos Pierrakakis from the Eurogroup said the situation with the Strait of Hormuz once again showed how painful any stoppage of oil supplies can be.
In his opinion, if the strait is opened and tensions begin to ease, markets will feel a bit of relief.
But in Europe, they understand: if the conflict drags on, it won’t be limited to oil. The pressure will gradually spread to other markets as well.
Amid all this, traders are increasingly talking about the return of heightened volatility to commodity markets. As long as tensions remain around the Middle East, oil may continue to react sharply even to individual statements by politicians or news about negotiations.
