Oil prices rose on Thursday after President Donald Trump said the United States does not need a deal with Iran, renewing doubts about how quickly the U.S.-Iran war could end and reviving a security premium in crude markets.
Brent crude traded 1.9% higher at $94.48 a barrel. West Texas Intermediate futures rose 2% to $88.19 a barrel.
In a Truth Social post, Trump wrote: “We don’t need a deal with Iran. Those days have long since passed. We’ve got their money, Hundreds of Billions of Dollars, and we’ve got their Strait!” The reference to “their Strait” pointed to the Strait of Hormuz, the waterway at the center of the conflict and a critical route for Middle East oil exports.
The rally followed a sharp run of losses. Oil prices had been under pressure after Trump’s comments following the U.S. midterm elections reduced fears of further strikes on Iran. WTI is down 16% in November, while Brent has lost 20%.
On Sunday, Trump said fresh attacks were highly unlikely as talks to end the conflict progressed, despite both countries reporting that shipping had been hit in or near the Strait of Hormuz. He also said further military action did not appear necessary “at this point,” easing concerns about prolonged disruptions to Middle East oil supplies.
John Kilduff, a partner at Again Capital, said investors may have been too quick to assume that fighting was ending. “The market may have gotten ahead of itself on pricing in a cessation of hostilities,” Kilduff said. He warned that renewed doubts about a deal would push the security premium in oil prices higher.
Kilduff also said Trump’s assertion that the U.S. controls the Strait of Hormuz could spur further Iranian attacks on shipping, increasing the risk of prolonged supply disruptions.
Andy Lipow, president of Lipow Oil Associates, said the president may be calculating that an economic blockade will eventually force Iran either to negotiate with the United States or to face a regime change as its economy collapses. Iran could take a different path, however, and continue attacking Middle East infrastructure. That would result in higher prices and could force the president to the negotiating table, Lipow said.
Lipow added that neither side’s negotiating position appears to have changed. Iran wants the blockade to end, sanctions to be lifted and a ceasefire declared that includes Lebanon. The United States wants Iran to eliminate its entire nuclear stockpile and allow free transit through the Strait of Hormuz.
Those competing demands leave the market sensitive to each new signal from Washington and Tehran. With the Strait of Hormuz still at issue and shipping already targeted, traders are weighing the possibility of a longer conflict against the prospect of a deal that could remove the supply risk.