By Myra P. Saefong
The bout of strength is likely not built to last
U.S. and global crude-oil prices are at their highest levels since September.
President Donald Trump ratcheted up pressure on Iran Wednesday, warning that a “massive armada” was headed to the Middle Eastern country and that time was running out for Tehran to reach a nuclear deal.
The threat provided support for shares of U.S. oil companies and lifted crude prices to their highest level since September. The bout of strength, however, isn’t likely built to last.
“Trump’s ‘armada’ steaming toward the [Persian] Gulf has stoked fears of a supply shock even before a single barrel has gone boom,” said Manish Raj, managing director at Velandera Energy Partners. “Fear, not actual production, is the ultimate octane booster in this game.”
Oil prices climbed in Wednesday dealings, with U.S. benchmark West Texas Intermediate crude for March delivery (CLH26) (CL.1) up 1% at $63.01 a barrel on the New York Mercantile Exchange. Global benchmark Brent crude (BRN00) saw its March contract (BRNH26) tack on 0.7% to $68.06 on ICE Futures Europe. WTI and Brent are both trading at their highest levels since late September.
Shares of major oil companies were also moving higher. Exxon Mobil Corp.’s stock (XOM) was up 0.6%, Chevron Corp. (CVX) added 0.6% and ConocoPhillips (COP) tacked on 1.2%.
In a post on social media Wednesday, Trump urged Iran to “negotiate a fair and equitable deal – NO NUCLEAR WEAPONS – one that is good for all parties.”
In response, Iran’s mission to the United Nations in New York posted on X that Iran was ready for dialogue, adding: “BUT IF PUSHED, IT WILL DEFEND ITSELF AND RESPOND LIKE NEVER BEFORE!”
The U.S. launched air and sea strikes on three nuclear sites in Iran in June of last year. Secretary of Defense Pete Hegseth said at the time that the goal was to “destroy or severely degrade Iran’s nuclear program.”
Supreme Leader Ali Khamenei “faces a do-or-die moment,” Velandera’s Raj said, adding that Iran’s leaders “aren’t treating this as a summer fling like last year’s dust-up; it’s an existential showdown.”
Raj expects Iran’s elite military force, the Islamic Revolutionary Guard Corps, to “swing hard and go out with a bang,” which he said could mean a closure of the Strait of Hormuz. Global oil markets have been concerned about potential disruptions in the flow of oil through the crucial maritime passage, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
Read: Why oil experts say U.S.-Iran tensions feel different this time compared with previous crises
‘History shows that no war stops the flow of oil in the long term.’Manish Raj, Velandera Energy
“But history shows that no war stops the flow of oil in the long term,” Raj said. “Indeed, neither the Gulf war nor Russia-Ukraine could stop oil barrels guzzling out.”
Tariq Zahir, managing member at Tyche Capital Advisors, said that any U.S. strike on Iran would disrupt oil supplies for only a short period of time. Furthermore, with the upcoming midterm elections, the last thing the Trump administration wants is a disruption to supplies and an increase in prices for oil, he said.
-Myra P. Saefong
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01-28-26 1219ET
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