Oil jumps above $117 as Trump’s Hormuz deadline approaches
Oil prices jumped and stocks fell Tuesday in another volatile trading session, as President Donald Trump’s 8 p.m. ET deadline for Iran to reopen the Strait of Hormuz approached without resolution.
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The price of U.S. crude oil jumped as high as $117.63 per barrel, but later fell back to trade around $112. International Brent crude oil rose as high as $111.80 per barrel, before trading flat, around $109, by late afternoon.
U.S. crude oil also posted its highest settlement price since June 2022.
Stocks, meanwhile, were buffeted by near constant headlines about the war and closed the trading session well off their lowest levels of the day.
The S&P 500 and Nasdaq Composite indexes ended fractionally higher after declines of more than 1% earlier. The Dow ended lower by only 85 points after falling 455 points at the day’s low.
What sent stocks on a roller coaster ride late in the trading day was a social media post from Pakistan’s prime minister Shehbaz Sharif, which asked Trump to delay his deadline by two weeks. Sharif also requested that Iran open the Strait of Hormuz for two weeks.
“The President has been made been aware of the proposal, and a response will come,” White House Press Secretary Karoline Leavitt told NBC News in a statement.
Since the war with Iran started Feb. 28, Trump has repeatedly announced a pause in strikes or extended talks just before deadlines that he has set.
The White House has also carefully watched the price of crude oil around the world, and the cost of gas for drivers back home.
As of Tuesday, the average price per gallon of retail gasoline was $4.14. The average price per gallon of diesel fuel was $5.64, nearing its 2022 all-time high of $5.82.
The Trump administration has insisted since the start of the war that gas prices will fall quickly as soon as the fighting in Iran stops and the Strait of Hormuz reopens.
But experts and analysts say the situation has evolved beyond one that has a simple resolution, even if U.S. and Israeli strikes were to end abruptly.
“The strategic picture has hardened into two divergent paths,” analysts at Société Générale wrote Tuesday. “Either we get a fragile détente —no ground war, controlled escalation, gradual supply recovery– or a protracted conflict with boots on the ground and structurally higher risk premia as countries respond with extreme stockpiling.”
“U.S. signalling now leans toward the latter,” they added.
For now, gas prices are expected to rise for the rest of the month at least, regardless of the situation on the ground in Iran.
“We forecast retail gasoline prices to peak at a monthly average of close to $4.30 per gallon (gal) in April,” the U.S. Energy Information Administration said in the latest edition of its Short Term Energy Outlook, released Tuesday. The federal agency also projected that diesel prices would “peak at more than $5.80/gal in April.”
“Barring any movement on the diplomatic front, it’s going to be hard for investors to take on much risk ahead of the President’s 8 PM deadline,” analysts at Bespoke Investment Group wrote in a note.
“At no time would a Taco Tuesday be more welcome than today, but the President has shown no signs of backing down,” they added, referring to a frequently used Wall Street acronym that stands for “Trump Always Chickens Out.”
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