Oil prices rose about 5% on Tuesday after US President Donald Trump said he did not want to extend a soon-to-expire ceasefire in the Iran war and that the US military was “eager to leave” if negotiations are unsuccessful.
Brent futures rose $4.30, or 4.5%, to $99.78 a barrel by 1:13 p.m. EDT (1713 GMT), while U.S. West Texas Intermediate CLc1 crude rose $4.75, or 5.3%, to $94.36.
Pakistan said there was still no confirmation that Iran would attend the latest peace talks with the United States, after US forces boarded a huge Iranian oil tanker at sea with just one day left before a ceasefire.
Shipping traffic through the Strait of Hormuz, which normally handles about 20% of the world’s supply of oil and liquefied natural gas (LNG), remained virtually halted on Tuesday with only three ships passing through the waterway in the past 24 hours, shipping data showed.
The European Union will provide guidance to airlines on how to handle issues such as airport slots, passenger rights and public service obligations in the event of jet fuel shortages due to the Iran war, the bloc’s transport chief said.
German Economy Minister Katherina Reiche said jet fuel supplies are not in danger as refineries adapt to increased demand, but added that the government is monitoring the situation.
russian supplies
However, Ukrainian President Volodymyr Zelenskiy said the Druzhba pipeline pumping Russian oil to Europe is ready to resume operations, indicating Ukraine is now waiting for a €90 billion aid package to be unlocked. But three industry sources said Russia will suspend oil exports from Kazakhstan to Germany via the Druzhba pipeline from May 1.
Elsewhere in Russia, Ukrainian drones attacked an oil pumping and shipping facility in Russia’s Samara region overnight.
In Germany, Europe’s largest economy, investor morale fell to its lowest level in more than three years in April as companies began to feel the economic fallout from the Iran war far beyond price increases, economic research institute ZEW said.
In the United States, retail sales rose more than expected in March as the war in Iran boosted gasoline prices and led to a record increase in revenue at gas stations, while tax refunds bolstered spending elsewhere.
Trump’s nominee for Federal Reserve chief Kevin Warsh called for “regime change” at the U.S. central bank, including a new approach to controlling inflation and a communications review that could discourage colleagues from saying too much about the direction of monetary policy.
Trump told CNBC he would be disappointed if Warsh didn’t cut interest rates immediately once he took office after being approved by the Senate.
Analysts worry that involving more politics in interest rate decisions could reduce the Federal Reserve’s ability to control inflation. Trump wants the Federal Reserve to cut rates, which would lower consumer costs and could boost economic growth and oil demand.
US oil inventories
Those crude price increases came as the market awaited direction from weekly storage reports from the American Petroleum Institute (API) trade group later on Tuesday and from the U.S. Energy Information Administration (EIA) on Wednesday.
Analysts projected that energy companies removed 1.8 million barrels of crude from storage during the week ending April 17.
If correct, it would be the first time energy companies have taken crude out of their warehouses for two weeks in a row since February, and compares with an increase of 0.2 million barrels in the same week last year and a decrease of 3.7 million barrels over the past five years (2021-2025).
