On Wednesday, the price of West Texas Intermediate (WTI) crude oil surged by 12.79%, reaching $112.93 per barrel. This jump came after a speech by U.S. President Donald Trump disappointed investors who had been hoping for a swift end to the war with Iran. At 9:00 AM local time, WTI futures contracts, the benchmark crude in the U.S., had risen by $12.81 from the previous day's close. In a speech delivered late Wednesday, the U.S. leader stated he was still seeking a diplomatic agreement to end the conflict and would complete his military objectives in Iran in about “two or three weeks.” However, he also pledged to attack Iran “with extreme force” in the coming weeks and reduce the country “to the Stone Age.” In his speech, he made no mention of sending ground troops and provided no further details after more than a month of hostilities. The lack of a clear timeline dampened investors' hopes that the war might have a quick resolution and that the Strait of Hormuz—through which a fifth of the world's oil and natural gas flows—could reopen soon, allowing oil to flow freely from the Persian Gulf to global markets. In his latest report, The Sevens Report, Tom Essaye notes that the war in the Middle East and its impact on global physical markets continue to be the primary catalyst. “Until there is clarity on a ceasefire—and ultimately, on the reopening of the Strait of Hormuz to tanker traffic—an upward market dynamic driven by fear will persist (as we are seeing this morning, with crude prices rebounding to near multi-week highs),” Essaye writes.
