Panoramic view of the Kharg Island port oil terminal, 25 km from the Iranian coast in the Persian Gulf and 483 km northwest of the Strait of Hormuz, Iran, March 12, 2017.
Anadolu | Anadolu | Getty Images
Oil prices fell in early Asian trading as traders assessed President Donald Trump’s comments on ending the war with Iran.
The Wall Street Journal reported in the United States late on Monday that President Trump told aides he was prepared to halt U.S. operations against Iran even if the Strait of Hormuz remains closed because forcing Iran to reopen the oil chokepoint could prolong the conflict.
West Texas Intermediate futures for May delivery turned higher, falling 0.72% to $102.14 a barrel as of 10:31 p.m. ET. Brent crude oil futures for May also fell, dropping 1% to $111.55 per barrel.
Matt Gertken, chief geopolitical strategist at BCA Research, told CNBC’s “Squawk Box Asia” on Tuesday that “the president’s appetite for large-scale, widespread types of saturation bombing against Iran is pretty low,” and described President Trump’s latest threats as an attempt to “withdraw and close the deal.”
“[President Trump]needs at least highly enriched uranium, something that the Iranians can actually provide and get regime survival in return,” Gertken said, adding that there was zero chance the U.S. would launch a full-scale ground invasion.
“But if we don’t get that within two weeks, (Trump) will have to target core (Iranian) regime elements, which will lead to greater collateral damage.”
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President Trump has previously threatened to expand attacks on Iranian civilian energy infrastructure, including desalination plants, if Iran fails to reopen the Strait of Hormuz.
President Trump said on Monday that unless Iran reopens the Strait of Hormuz and agrees to a peace deal to end the war, he will “end out his nice ‘sojourn’ in Iran” by blowing up and completely destroying power plants, oil facilities, and “possibly” desalination infrastructure, according to a post on Truth Social.
The Iran war has entered its fifth week, with hostilities escalating across the region. Earlier on Tuesday, the Iranian government crashed a fully loaded Kuwaiti oil tanker at its berth in Dubai port.
“Competent authorities in Dubai have confirmed that a team has successfully extinguished the fire that struck a Kuwaiti oil tanker,” the Dubai government said in a social media post.
Ben Emmons, chief investment officer at Fed Watch Advisors, said the incident shows the Islamic Republic’s control over the Strait of Hormuz is further tightened, targeting tankers just outside the waterway and highlighting new risks of further disruption to energy flows.
“The result is a more asymmetrical game where the U.S. is inclined to leave and Iran still has an incentive to impose costs,” Emmons said.
President Trump has regularly vacillated between praising talks with Iran as productive and warning that he is prepared to order additional troops to the region.
He told reporters on Monday that Tehran had agreed to “most” of the 15-point ceasefire proposal put forward by the United States, but Tehran publicly rejected the terms and agreed with its own terms, including maintaining sea control of the Strait of Hormuz.
President Trump is also reportedly considering the option of sending ground forces to seize Kharg Island, a major fuel hub that facilitates 90% of Iran’s oil exports.
Shipping through the Strait of Hormuz, which before the conflict typically carried one-fifth of the world’s seaborne oil shipments, has virtually stopped since the war began on February 28.
Experts have warned that a possible ground operation to seize Kharg Island risks increasing U.S. military casualties and prolonging the cost and duration of the war.
