Oil Holds Near $100 Amid Trump's 'Ammunition' and 'Plenty of Time' Remarks on Iran Conflict

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Oil Prices Hover Near $100 as Geopolitical Tensions Escalate

Global benchmark Brent crude oil held its ground near the $100 per barrel level on Friday morning, as the U.S.-Iran conflict heads into its third week. Brent futures saw a slight dip of 1.13% to $99.32 per barrel at 7:49 a.m. ET, after having closed above $100 on Thursday. West Texas Intermediate (WTI) crude futures also experienced a downturn, falling 2.07% to $93.75 per barrel.

These price levels come after another week of significant gains for oil. Brent futures climbed more than 9% this past week, following a substantial 27.9% surge last week – the largest weekly gain for oil prices since the onset of the COVID-19 pandemic in 2020. WTI futures, which recorded their best week since 1983 in the previous period, are on track to finish the current week approximately 5.8% higher.

Traders and market watchers are closely monitoring developments in the Middle East, where the conflict involving the U.S., its allies like Israel, and Iran shows no immediate signs of de-escalation. In a notable statement overnight, President Donald Trump signaled a prolonged engagement, asserting, "We have unparalleled firepower, unlimited ammunition, and plenty of time." He urged his supporters to "watch what happens" to the Iranian regime. Adding to the pressure, Axios reported on Friday morning that Trump had informed G7 leaders earlier in the week that Iran was "about to surrender." This claim stands in contrast to Iran's defiant stance, with the country's new supreme leader, Mojtaba Khamenei, vowing to continue fighting in a message broadcast via state television just a day later.

Adding to the market's anxiety, several foreign-flagged vessels in or near the Strait of Hormuz, a critical chokepoint for global oil transit, have been targeted this week amidst the escalating conflict, leading to a blockade. These attacks have intensified concerns that a protracted war could trigger a global economic shock. Ebrahim Zolfaqari, a spokesperson for Iran's military command, warned on Wednesday, as reported by Reuters, "Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised."

Despite the elevated prices, international efforts to ease supply pressures are underway. The International Energy Agency (IEA) has agreed to release a record 400 million barrels of oil from its strategic reserves. Additionally, the White House has taken steps to temporarily waive certain sanctions on Russian oil exports. However, these measures have so far failed to significantly dampen market sentiment, which remains heavily influenced by the geopolitical risks.

In an analyst note on Friday morning, Emmanuel Cau from Barclays highlighted the growing unease among investors who had initially anticipated a shorter conflict. "Investors still believe in the Trump put, hence global equities are not down as much as in past oil shocks," Cau observed. "But nervousness is growing by the day and the longer the Strait of Hormuz stays closed the more stagflationary markets will turn. Watch central banks next week amid hawkish repricing in rates." This sentiment underscores the delicate balance between market expectations and the escalating real-world risks.

Amjad Bseisu, CEO of British petroleum producer EnQuest, shared his perspective with CNBC's "Squawk Box Europe" on Friday, stating that the oil market has "never seen something of this magnitude before." He elaborated on the potential impact of supply disruptions, noting, "Every day we see a delay, there's another 20 million barrels [wiped off the market], and that will have an impact, and continues to have an impact." Bseisu expressed concern about the duration and severity of the crisis, concluding, "I think this will be probably longer and harder as a crisis than before, and probably something we need to just watch out for the downsides rather than the upsides."

Bseisu drew a parallel to the Arab oil embargo of the 1970s, which led to a quadrupling of prices. While current price increases have reached approximately 50%, he believes the current situation portends a prolonged period of elevated prices and market volatility. The market's reaction reflects a deep-seated concern over the stability of energy supplies and the broader economic consequences of sustained conflict in a vital global region.

Ekhbary News Agency