Oil whipsaws on Trump's Iran escalation warning
Brent crude surged as much as 8% on Thursday to $109.74 a barrel after Donald Trump, in a televised address, pledged to hit Iran "extremely hard" over the coming weeks. The move wiped out the previous session's decline, during which Brent had briefly dipped below $100 a barrel as traders priced in a possible near-term end to the conflict.
The reversal illustrates how completely oil pricing has become a function of presidential communication. Within 48 hours, markets absorbed two diametrically opposed signals from the White House: Trump suggested on Tuesday that the US could exit the war within two to three weeks, and then on Thursday threatened a significant escalation. Each statement produced an immediate and substantial price move.
The Guardian reported Brent's intraday high at $109.74, an 8% gain on the day. CNBC had earlier reported a 5% rise in Asian hours before the full extent of the move became clear in European trading.
For portfolio managers, the immediate concern is duration. If the conflict extends rather than contracts, pressure on energy costs will persist, complicating the inflation outlook across importing economies. The secondary risk is to equity markets, which sold off Thursday as crude rose, reversing a global rally that had built on Wednesday's de-escalation optimism.
