Oil Prices see a rise after Trump’s Order to Navy to “Shoot and Destroy” Iranian Gunboats
Two days after the oil prices crashed, Wednesday morning saw them rise after President Trump triggered a short-covering rally with his tweet.
The market is being somewhat influenced by tensions in the Strait of Hormuz, the world’s number one shipping lane for crude oil. The September attack on the Abqaiq oil facilities in Saudi Arabia had triggered a 20% price jump in Brent crude while the assassination of Qassem Soleimani, Iran’s top General, had worsened the tensions.
On April 2nd, a US-flagged boxship was harassed by heavily armed Iranian patrol boats. Iran had also deployed anti-ship missiles on Qeshm Island the same week. The seizure of a Hong-Kong flagged tanker on 14th April is also believed to have been carried out by Iran’s Revolutionary Guard.
A group of 11 Iranian patrol boars made some “dangerous and harassing” maneuvers near U.S. warships last Wednesday. They came as close as 10 yards and left after half an hour. This provoked Trump to tweet that he has ordered the US Navy to destroy any Iranian gunboats that harass US ships.
The markets are also bracing for a very bearish EIA crude inventory report. While Trump’s tweet could’ve been a gamechanger in a normal market, it won’t have a lasting impact in this oversupplied market.