Oil Markets Plunge and Rebound Amid Trump's Strait of Hormuz Address
Global oil markets turned highly volatile on Thursday, with prices first plunging near the $100 per barrel mark and then rebounding sharply as traders reacted to US President Donald Trump's prime-time address to the nation. Sentiments remained cautious throughout the day, as the speech failed to ease investor concerns over the disruption of the critical Strait of Hormuz, a key global oil route.
Initial Downturn and Market Reaction
In early trade, both major benchmarks dropped significantly amid anticipation of Trump's address. Brent crude futures fell by $1.16, or 1.15%, to $100 per barrel by 1204 GMT, while US West Texas Intermediate crude declined by $1.41, or 1.41%, to $98.71 per barrel. This downturn extended losses from the previous session, as markets weighed the possibility of a US pullback after Trump told Reuters the conflict would end fairly soon.
Sharp Rebound Following Presidential Remarks
However, sentiment shifted dramatically once the president delivered his remarks. Instead of signalling de-escalation, Trump urged other nations to step in and reopen the Strait of Hormuz, which remains shut and is disrupting global oil supplies. Following the speech, Brent crude climbed more than 4% to touch $106, while West Texas Intermediate rose 3% to $103. Both contracts had been in negative territory before his address began.
Key Points from Trump's Address
Speaking at 9 pm EDT from the White House, Trump outlined progress in the conflict and reiterated his administration's objectives. He called for dismantling Iran's missile production and naval capabilities, preventing its proxies from destabilising the region, and ensuring it does not acquire a nuclear weapon. In his speech, Trump stated, To those countries that can't get fuel, many of which refused to get involved in the decapitation of Iran, I have a suggestion—Number 1, buy oil from the United States. And Number 2, build up some delayed courage, go to the Strait, and just take it. Iran has been, essentially, decimated. The hard part is done.
Referring to Operation Epic Fury, Trump said recent military actions had significantly weakened Iran's forces. He detailed that Iran's ability to launch missiles and drones is dramatically curtailed, and their weapons factories and rocket launchers are being destroyed. He added that the country's navy is gone, its air force is in ruins, and its leaders are now dead, while the Islamic Revolutionary Guard Corps is being decimated.
Context of the Ongoing Conflict
The address marked Trump's first prime-time speech since strikes were launched alongside Israel more than a month ago. In his remarks, he emphasized, In these past four weeks our armed forces have delivered swift, decisive, overwhelming victories on the battlefield. The speech came at a time when the ongoing war in the Middle East has entered its second month and Iran's chokehold over the Strait of Hormuz has tightened, effectively disrupting global oil supplies and heightening market uncertainties.
