Trump's words that countries interested in oil supplies should liberate the Strait of Hormuz themselves led to rising prices in the markets. Investors are dissatisfied with the lack of clear timelines for the end of the war.
U.S. President Donald Trump's address to the nation, in which he promised to "soon" end the U.S. and Israel's war against Iran and announced powerful strikes against the Islamic Republic in the coming "two to three weeks," did not impress investors. As a result, oil prices in global markets rose, while stock prices fell, AFP reported on the morning of April 2.
Brent crude oil, which fell below $100 a barrel on April 1, surged nearly seven percent to $108.15, while West Texas Intermediate crude rose more than six percent to $106.75.
Trump's Address to the Nation Regarding the War in Iran
"We are going to strike them (Iran - Ed.) with extremely strong blows over the next two to three weeks. We are going to bring them back to the Stone Age, where they belong," Donald Trump said on the night of April 2. He also threatened that if the Islamic Republic refused to agree to a deal on Washington's terms, the U.S. would deliver "very strong strikes on each of their power plants, probably simultaneously."
Additionally, the American president once again urged countries that rely on oil supplies through the Strait of Hormuz, blocked by Iran, to liberate it themselves. "Countries of the world that receive oil through the Strait of Hormuz must take care of this passage. They must cherish it. They must seize it and nurture it. They can easily do this. Go to the strait and just take it. Protect it. Use it for yourselves," Trump stated, noting that the U.S. does not need this route.
These words from the head of the White House undermined the nascent recovery in global markets, which had been a result of recent statements from the U.S. president that the war in Iran "will end very quickly," and assurances from Iranian President Masoud Pezeshkian that Iran "has the necessary will" to conclude this conflict, journalists noted.
Premature Drop in Oil Prices
Donald Trump "spoke about achieved goals, but not about resolving the conflict. About continuing strikes, not about withdrawing troops. About possible escalation, not about conclusion," quoted AFP in this regard expert from SPI Asset Management Stephen Innes. "This message did not mean panic, but it clearly conveyed the idea of unfinished business. And in markets, unfinished business is oxygen for volatility.
"Therefore, oil behaved as it always does when the illusion cracks. It rose in price not because the war suddenly escalated, but because the market prematurely reflected a drop in prices in anticipation of its conclusion."
For his part, Pepperstone expert Michael Brown, commenting on market developments after Donald Trump's address to the American nation, expressed the opinion that "investors wanted to hear a bit more than what Trump talked about." The U.S. president "failed to provide clear timelines for the end of the conflict," he clarified.
Unclear Prospects for Ending the War in Iran
Conflicting statements from Trump and Iranian authorities about possible prospects for ending the war, as well as the ongoing blockade of the Strait of Hormuz by Tehran, which plays a key role in supplying 20% of the world's oil, have led to significant market volatility, according to the publication.
Earlier, World Bank Managing Director Pascal Donohoe expressed concerns that the crisis caused by the war in Iran would impact the global economy.
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