Oil prices rose about 5% on Tuesday after U.S. President Donald Trump said he did not want to extend a soon-to-expire ceasefire in the Iran war and that the U.S. military “braced” if talks fail.
Brent futures rose $4.30, or 4.5%, to $99.78 a barrel.
Pakistan said there was still no confirmation that Iran would take part in final peace talks with the United States after US forces boarded a huge Iranian oil tanker at sea with just a day left for the ceasefire.
Shipping traffic through the Strait of Hormuz, which normally handles about 20% of global supplies of oil and liquefied natural gas (LNG), remained largely at a standstill on Tuesday with only three ships passing the waterway in the past 24 hours, shipping data showed.
The European Union will give airlines guidance on how to deal with 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 were not at risk as refineries adjusted to increased demand, but added that the government was monitoring the situation.
Russian supplies
However, Ukrainian President Volodymyr Zelenskiy said the Druzhba oil pipeline, which pumps Russian oil to Europe, is ready to resume operations, signaling that Ukraine now expects a 90 billion euro aid package to be released. But three industry sources said Russia is set to stop oil exports from Kazakhstan to Germany via the Druzhba pipeline from May 1.
Elsewhere in Russia, Ukrainian drones struck an oil pumping and dispatch facility in Russia’s Samara region overnight.
In Germany, the biggest economy in Europe, investor morale fell to its lowest level in more than three years in April as companies began to feel the economic impact of the Iran war far beyond price increases, the ZEW Economic Research Institute said.
In the U.S., retail sales rose more than expected in March as the war in Iran boosted gasoline prices and led to a record surge in revenue at gas stations, while tax refunds supported spending elsewhere.
Trump’s Federal Reserve chief nominee, Kevin Warsh, called for “regime change” at the U.S. central bank, including a new approach to controlling inflation and a communications overhaul that could discourage his colleagues from saying too much about the direction of monetary policy.
Trump told CNBC that he would be disappointed if Warsh did not cut interest rates immediately upon taking office after being confirmed by the Senate.
Analysts worry that bringing more politics into interest rate decisions could reduce the Fed’s ability to control inflation. Trump wants the Fed to cut interest rates, which would reduce consumer costs and could boost economic growth and demand for oil.
US oil reserves
Those crude price increases came as the market awaited direction from weekly inventory reports from the American Petroleum Institute (API) trade group later on Tuesday and the US Energy Information Administration (EIA) on Wednesday.
Analysts forecast that energy companies pulled 1.8 million barrels of crude oil from storage during the week ended April 17.
If correct, it would be the first time energy companies pulled crude oil from storage for two consecutive weeks since February, and compares with a 0.2 million-barrel increase in the same week last year and a 3.7-million-barrel decline over the past five years (2021-2025).
