Oil Jumps More Than 3% After Trump Says the US No Longer Needs a Deal With Iran

Key points

• Brent crude settled at $95.82 a barrel on Thursday 12 November, up $3.06 or 3.3%, and US benchmark WTI closed at $88.74, up $2.21 or 2.6%.
• The move came after President Donald Trump wrote on social media that the US no longer needs a deal with Iran.
• Even after the jump, WTI is down about 16% in November and Brent about 20%, as traders had been pricing in an end to the conflict.
• Iran's Supreme National Security Council secretary, Mohsen Rezaee, said Tehran will not ship any enriched nuclear material out of the country.

Oil jumps on Trump's post

Crude jumped after Trump posted on Thursday that the US does not need an agreement with Tehran and claimed that Washington holds hundreds of billions of dollars of Iranian money and controls the Strait of Hormuz, according to CNBC. Oilprice.com reported that Brent first surged and then trimmed its gain, trading near $96 late in the morning, about 3.7% higher. Final settlements were $95.82 for Brent and $88.74 for WTI.

From optimism to doubt

The reversal matters because markets had spent weeks leaning the other way. Brent has fallen roughly 25% from a late-October high of $118, Oilprice.com noted, as hopes of an end to the fighting built. Trump had said on Monday that the war was effectively over after talks with Qatar's prime minister, and on 2 November that a settlement could be close.

Thursday's post undercut that story. John Kilduff of Again Capital told CNBC the market may have priced in an end to hostilities too quickly, and that fresh doubt over a deal would add to the security premium in oil. He also warned that Trump's claim of control over the Strait could invite more Iranian attacks on shipping.

Positions remain far apart

Andy Lipow of Lipow Oil Associates said neither side has moved. Iran wants the US blockade lifted, sanctions ended and a ceasefire in Lebanon, while Washington wants Iran's nuclear stockpile eliminated and free passage through Hormuz. Oilprice.com said Rezaee's statement on enriched material showed little sign of Iran softening its stance, and that Iran claimed four tankers were hit by explosions over two days, a claim that has not been independently verified.

Supply is still coming

Physical supply has been improving even if shipping is not back to normal. Oilprice.com reported that Saudi Arabia's output rose 26% in October and Iraq also pumped more. Jeffrey Currie of Real Macro told CNBC that a substantial volume of oil is now flowing out of the Middle East, which should keep near-term prices tame, while high insurance and tanker costs support longer-dated futures.

What to watch

Traders will look for any sign of renewed talks or fresh attacks on shipping around Hormuz. After a month of steep declines, Thursday's rally shows how quickly prices can swing back when diplomacy stalls.

This report is based on coverage by CNBC, Oilprice.com and Eurasia Business News.