The price of oil surged after U. S. President Donald Trump said in his first national address since the Iran war began that the United States will continue to hit Iran very hard. He told the nation he will “finish the job” and warned operations could continue over the next two to three weeks. Markets reacted immediately: crude rallied and Asian equities fell in early trading on Thursday.
Price Of Oil and market fallout
Oil jumped sharply after the speech. Brent crude climbed 4. 9% to $106. 16 per barrel and benchmark U. S. crude rose 4% to $104. 15 a barrel, while one report put Brent later at around US$109 a barrel as investors reassessed the outlook for supply disruptions. The spike followed remarks in which the president said U. S. forces would “bring them back to the Stone Ages” if necessary and that “core strategic objectives are nearing completion. ” The message offered no clear path to reopen the Strait of Hormuz or to end the supply shocks that have pushed energy costs higher.
Immediate reactions
Global equity moves were swift. Tokyo’s Nikkei 225 fell 1. 9% to 52, 731. 94 and South Korea’s Kospi lost 3. 6% to 5, 281. 22 in early Asia trading; Hong Kong’s Hang Seng slipped 0. 9% to 25, 056. 42 and the Shanghai Composite was down 0. 5% to 3, 928. 30. Australia’s S&P/ASX 200 dropped 0. 6% and Taiwan’s Taiex traded 1. 1% lower. Precious metals moved counter to oil: gold eased 2% to $4, 718. 70 per ounce while silver declined 4. 9% to $72. 39 an ounce.
Market strategists and analysts voiced frustration with the lack of a clear exit plan. Takashi Hiroki, chief strategist at Monex in Tokyo, said the speech left the market disappointed because it provided fewer details than investors had hoped for. Mike Houlahan, director of Electus Financial Ltd in Auckland, warned the extension of operations into the coming weeks pushes out expectations of a resolution and raises pressure on the fuel supply chain. Matt Simpson, senior market analyst at Stonex in Brisbane, said that without plans to reopen the Strait of Hormuz, oil prices are likely to remain high indefinitely. Russel Chesler, head of investments and capital markets at Vaneck in Sydney, said the central question driving volatility is when the conflict will end.
What’s next
Markets are braced for ongoing volatility as investors track U. S. military statements and developments in the Iran war over the next two to three weeks. Traders who had added risk exposure earlier retreated ahead of the extended operations window, and analysts named in market coverage expect the prospect of prolonged disruption to keep the price of oil elevated and put renewed pressure on inflation. Watch for further policy signals and military updates that will determine whether the recent jump in energy prices persists or eases.
