U.S. oil prices rose on Thursday as President Donald Trump’s comments raised concerns that there was no end in sight to the U.S.-Iranian war.
brent crude oil It traded 1.9% higher at $94.48 per barrel. West Texas Intermediate Futures It rose 2% to $88.19 per barrel.
“We don’t need a deal with Iran. Those days are long gone. We have their money, hundreds of billions of dollars, and we have their Straits!” Trump said in a post on Truth Social.
Jeffrey Currie, founder of Real Macro and a widely followed forecaster on Wall Street, said oil prices are calm in the short term because of the significant amount of oil currently flowing out of the Middle East. However, he noted that the cost of these barrels is very high due to high insurance premiums and tanker fees, and crude oil futures prices for long-distance deliveries remain high.
“You put a cap on the prompt barrel, but it doesn’t make the next barrel cheaper. That’s why you can’t be bearish here, and you can’t be really bullish here,” Currie said on CNBC’s “The Exchange.”
On the investment front, Currie said he still favors long-term oil, drilling and production stocks.
Brent and WTI-YTD
Thursday’s move comes as oil prices come under pressure after President Donald Trump’s comments after the U.S. midterm elections eased fears of further attacks on Iran. WTI fell 16% in November and Brent fell 20%.
Despite both countries reporting damage to ships in or near the Strait of Hormuz, President Trump said Sunday that new attacks were highly unlikely as talks progressed to end the conflict. He also allayed concerns about prolonged disruptions to oil supplies in the Middle East, saying further military action did not seem necessary “at this time.”
John Kilduff, a partner at Again Capital, said investors may have been too quick to judge the fighting over.
“The market may have priced in a cessation of hostilities and got ahead of it,” Kilduff told CNBC. He warned that renewed doubts about the deal would push up the security premium in oil prices.
Kilduff said President Trump’s insistence that the United States controls the Strait of Hormuz could further incite Iranian attacks on ships and increase the risk of long-term supply disruptions.
Andy Lipow, president of Lipow Oil Associates, said: “The president may believe that given enough time, an economic blockade of Iran will force him to either negotiate with the US or force regime change as Iran’s economy collapses. The Iranians may have a different idea and continue attacking infrastructure in the Middle East, which would drive up prices and force the president to the negotiating table.”
“In any case, I don’t see the negotiating position of both sides changing. Iran wants the blockade to end, sanctions to be lifted, and a cease-fire to be declared that includes Lebanon. The United States wants Iran to dismantle all its nuclear stockpiles and allow free passage through the Strait of Hormuz.”
—CNBC’s Pippa Stevens contributed to this report.
