Oil Tops $110 and European Diesel Breaks $200 as Trump Threatens Escalation
Oil surged above $110 a barrel after U.S. President Donald Trump vowed to escalate the war in Iran in the coming weeks, a shift that markets read as likely to prolong disruptions to energy flows through the vital Strait of Hormuz.
West Texas Intermediate (WTI) jumped 11%, while global benchmark Brent settled near $109 a barrel. Europe’s benchmark diesel futures climbed above $200 a barrel for the first time since 2022. Dated Brent — a key reference price for physical crude — surged to its highest level in 18 years.
The rally followed Trump’s rare prime-time address, in which he portrayed the war as a success. Trump said the U.S. would hit Iran “extremely hard” over the next two to three weeks and argued the Strait of Hormuz would reopen “naturally” after the conflict ends, without providing details or a clear timeline. French President Emmanuel Macron said it would be unrealistic to reopen the strait through military means.
With flows through Hormuz still not resuming, there were few signs pressure on oil markets will ease. WTI prices have roughly doubled since the start of the year as the war continues to squeeze traffic through the chokepoint, which typically carries about a fifth of global oil and liquefied natural gas shipments.
Trump’s unexpectedly hawkish tone also pushed WTI’s prompt spread — the difference between the two nearest contracts — above $16 a barrel at one point on Thursday, the widest premium on record. Traders said the move was driven by a rapid unwind of bearish positions that had bet on a quick end to the war, alongside expectations of tighter U.S. supply as overseas buyers rush for American crude.
“The market was not positioned for this,” said Scott Shelton, an energy specialist at TC ICAP. Investors “expected de-escalation talk and got the exact opposite,” he said.
Prices eased from intraday highs after Iranian state media reported the Islamic Republic is drafting a protocol with Oman to monitor traffic through the strait. Yuri Ushakov, an aide to Russian President Vladimir Putin, told a state-run outlet that Hormuz is open for Russian shipping.
The United Arab Emirates, meanwhile, is appealing to the United Nations to authorize a range of measures — including the possible use of force — to restore oil and gas flows through the strait.
While crude has drawn the headlines, refined fuel markets have been even tighter. European diesel’s jump on Thursday underscored renewed inflation risks for the global economy, with some cargoes traveling thousands of miles as buyers scramble to secure available supply.
“Nothing in Trump’s speech alters the underlying market reality: the strait has effectively been closed for a month, and flows remain materially constrained with at least several weeks of disruption still likely, if not more,” said Robert Rennie, head of commodity research at Westpac Banking Corp.
Oil had slipped ahead of Trump’s address on expectations he might signal a ceasefire, while broader markets rallied. In the speech, however, Trump said U.S.-Israeli military operations will soon escalate, again threatening strikes on Iranian oil facilities and “every one of their electric-generating plants.”
Iran continued attacks across the Persian Gulf on Thursday and showed little appetite to begin talks, according to the report.
“As market inventory buffers erode, the physical tightness seen thus far in Asia begins to cascade globally,” said Dan Ghali, a commodity strategist at TD Securities. Without a resumption of flows, he said benchmark crude and product prices are likely to face increasing upward pressure in the weeks and months ahead until higher pricing forces additional demand destruction.
Oil futures will not trade on Friday due to the Easter holiday weekend, creating a longer-than-usual stretch without price discovery. Traders are closely monitoring vessel movements, after three tankers broadcasting Omani ownership appeared to enter the Strait of Hormuz by hugging Oman’s coastline.
WTI for May delivery jumped 11% to settle at $111.54 a barrel in New York. Brent for June settlement rose 7.8% to settle at $109.03 a barrel.
Source : Newsmaker.id
