Oil prices soared Wednesday after President Donald Trump threatened to bomb Iran for two days and reimpose a U.S. naval blockade in retaliation for an attack on a tanker transiting the Strait of Hormuz.
west texas intermediate Futures rose 4.4% to close at $73.52 per barrel. brent Futures, the international benchmark, rose 5.2% to settle at $78.02.
President Trump said at a NATO summit in Turkey that he believes the ceasefire with Iran is over. His comments came after the US bombed the Islamic Republic overnight.
On Wednesday, President Trump again threatened to bomb and blockade Iran, raising concerns in the oil market that a resumption of fighting could disrupt exports through Hormuz just as it begins to recover. But the stock subsequently fell from its high after President Trump said he did not believe Iran and the United States would return to full-scale war.
“I don’t think it will start again,” the president said. “I think it will be over very quickly. They hit a few ships, so we hit even harder. When they hit, we hit ten times harder.”
In response to a question from CNBC at a press conference in Turkey’s capital Ankara, President Trump said he expected oil prices to fall as tankers continued to depart from Hormuz.
“They’re going to wake up little by little and this will be over soon,” he said. “We’ve pulled all the ships out of the Channel, so there’s a glut of oil right now, but oil is going to go down.”
WTI crude oil
Meanwhile, Iran has shut down Hormuz and threatened to respond to any new attack with overwhelming force, according to state news agency Press TV.
Overnight, the United States bombed more than 80 targets, including Iranian air defense systems, command and control networks, radar sites, anti-ship missile capabilities, and small vessels, according to U.S. Central Command.
The Treasury Department on Tuesday revoked authorization to sell oil to Iran. The approval was seen by critics as a major U.S. concession to Iran in the interim agreement.
Iran’s Foreign Ministry labeled the attack a “serious violation of the Memorandum of Understanding” reached between the US and Iranian governments last month to end the conflict.
The sharp rise in tensions followed attacks on three ships in or near Hormuz on Tuesday. The US-led Joint Maritime Information Center raised its threat assessment for ships navigating the waterway to “severe” and warned of the possibility of further hostile action by Iran.
