Oil prices fell sharply on Tuesday after Donald Trump warned Iran against blocking a vital global shipping route, easing fears of prolonged supply disruptions.
In a post on social media, President Trump cautioned that any attempt by Iran to obstruct oil shipments through the Strait of Hormuz would trigger a severe response from the United States.
“If Iran does anything that stops the flow of oil within the Strait of Hormuz, they will be hit by the United States of America twenty times harder than they have been hit thus far,” he said.
By late morning trade in Asia, Brent Crude had dropped six percent to 93 dollars and five cents per barrel, while Nymex Light Sweet fell 6.1 percent to 88 dollars and 96 cents.
Oil prices had surged to nearly 120 dollars per barrel on Monday amid fears that the United States–Israel conflict with Iran could cause prolonged supply disruptions across the Middle East. However, markets retreated after President Trump suggested the conflict may be short-lived.
Speaking during a news conference in Florida, President Trump said the military action was a temporary measure.
“We took a little excursion because we felt we had to do that to get rid of some evil. Then, I think you’ll see it’s going to be a short-term excursion,” he said.
Energy analysts say the price drop has provided temporary relief to traders, though uncertainty remains high.
Alberto Bellorin from investment firm InterCapital Energy said energy markets remain volatile and sensitive to developments in the conflict.
Oil trading will remain highly unstable, with prices likely to rise if tensions escalate and fall if the situation improves, he said.
Meanwhile, stock markets across Asia posted gains as investor concerns over the economic impact of the conflict eased.
Nikkei 225 rose 3.3 percent, Hang Seng Index gained 1.7 percent, while KOSPI climbed 6.2 percent.
Regional markets had recorded heavy losses a day earlier amid fears that disruptions in the Gulf region could fuel inflation and trigger interest rate hikes.
The Strait of Hormuz remains a critical artery for global energy supplies, with about one-fifth of the world’s oil passing through the narrow channel.
Source: BBC
