Oil prices were little changed Tuesday, after U.S. President Donald Trump made ominous threats against Iran ahead of his deadline for the Strait of Hormuz to reopen this evening.
U.S. crude oil for May rose 54 cents to close at $112.95 per barrel. International benchmark Brent crude with June delivery was last down 15 cents to $109.62 per barrel.
“A whole civilization will die tonight, never to be brought back again,” Trump said in a social media post. “I don’t want that to happen, but it probably will.”
“However, now that we have Complete and Total Regime Change, where different, smarter, and less radicalized minds prevail, maybe something revolutionarily wonderful can happen,” the president said. “WHO KNOWS?”
“We will find out tonight, one of the most important moments in the long and complex history of the World,” Trump said. “47 years of extortion, corruption, and death, will finally end. God Bless the Great People of Iran!”
Meanwhile, the U.S. struck military targets on Iran’s Kharg Island overnight, a White House official told CNBC. Kharg is Iran’s oil export hub.
Brent crude prices
Ceasefire talks
Trump has vowed to decimate Iran’s power plants and bridges if Tehran does not reopen the Strait by 8 p.m. ET on Tuesday. The president said Monday that Iran’s leadership was negotiating in “good faith.”
Tanker traffic through the Strait, which connects the Persian Gulf to the global market, has plunged due to attacks by Iran on vessels. This has triggered a massive supply shock. Prices have soared for crude oil, jet fuel, diesel and gasoline since the U.S. and Israel attacked Iran on Feb. 28.
“We have to have a deal that’s acceptable to me, and part of that deal is going to be — we want free traffic of oil and everything else,” Trump told reporters at a press conference Monday.
Senior Iranian officials told The New York Times Tuesday that Tehran pulled out of negotiations after Trump’s threats to destroy the country. Middle East officials told The Wall Street Journal that Iran cut off direct communication with the U.S. but negotiations continue through mediators.
“Risk is under priced right now given where we are in the kind of rhetoric and the language that we’re seeing,” Dan Yergin, S&P Global vice chairman, told CNBC’s “The Exchange” on Tuesday.
“The Iranians have made it pretty clear, if their basic infrastructure gets attacked then the infrastructure of the Arab Gulf states gets attacked,” Yergin said.
Traffic trickling through
The outcome of the peace talks remains murky, said Ed Yardeni, president of Yardeni Research, keeping investors on tenterhooks and caught between pricing in an imminent end to the conflict or further escalation.
“There is no way to predict the outcome. We can’t rule out that Iran will cave in. Or, Trump may postpone the deadline again, explaining that negotiations are making progress. Or the war will escalate,” Yardeni said. “The fog of war remains thick.”
Shipping through the Strait…
Read More: Oil rises as Trump makes ominous threat against Iran ahead of deadline
