Oil Prices Surge 3% Following Trump's Rejection of Iran Ceasefire Extension

Oil Prices Surge 3% After Trump's Comments on Iran War

Oil prices rose approximately 3% on Tuesday following a statement by U.S. President Donald Trump, indicating that the U.S. military was prepared to take action if negotiations with Iran do not succeed. Trump's comments led to a significant increase in oil prices, with Brent futures rising $2.48, or 2.6%, to $97.96 a barrel at 11:58 a.m. EDT (1558 GMT), while U.S. West Texas Intermediate (WTI) crude delivery rose $3.54, or 4.0%, to $93.15.

The U.S. military's actions to enforce a blockade on Iran continued, with the seizure of a tanker linked to Iran in international waters. Shipping traffic through the Strait of Hormuz, which normally handles about 20% of global oil and liquefied natural gas (LNG) supplies, remained severely disrupted, with only three ships passing the waterway in the past 24 hours.

The European Union is preparing for potential jet fuel shortages due to the Iran war. The bloc's transport chief announced that the EU will provide guidance to airlines on how to handle issues such as airport slots, passenger rights, and public service obligations in the event of shortages. German Economy Minister Katherina Reiche stated that supplies of jet fuel are not in danger, as refineries adapt to increased demand, but the government is monitoring the situation.

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In related developments, Ukrainian President Volodymyr Zelenskiy announced that the Druzhba oil pipeline, which pumps Russian oil to Europe, is ready to resume operations, pending a 90 billion euro aid package to be unblocked. However, three industry sources revealed that Russia plans to stop oil exports from Kazakhstan to Germany via the Druzhba pipeline starting from May 1.

The escalation of tensions in the region led to a decline in investor morale in Germany, with the ZEW economic research institute reporting that investor confidence fell to its lowest level in more than three years in April. In the United States, retail sales increased more than expected in March, driven by higher gasoline prices and a record surge in receipts at service stations.

The market is awaiting weekly storage reports from the American Petroleum Institute (API) trade group and the U.S. Energy Information Administration (EIA) for further direction on crude oil prices. Analysts project that energy firms pulled 1.8 million barrels of crude from storage during the week ended April 17, marking the first time energy firms have pulled crude out of storage for two weeks in a row since February.

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