Oil prices climbed higher by early afternoon in Europe, following news about further escalation of the war in Iran.
Investors remain wary as the Wall Street Journal reports that US President Donald Trump threatened to destroy Iran’s key oil export hub and desalination plants unless it accepts a deal, while also suggesting that diplomacy was making progress.
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The news comes as governments around the world scramble to implement measures to ease the burden of surging fuel prices while also seeking to conserve energy, with around one-fifth of global crude oil and gas passing through the Strait of Hormuz.
The Wall Street Journal, citing administration officials, said President Trump and his aides had concluded that a mission to reopen the waterway would extend beyond his four to six-week timeline.
It also added that President Trump had decided to focus on targeting Iran’s missiles and navy before seeking to diplomatically pressure the country to reopen the Strait.
US Secretary of State Marco Rubio said President Trump has “options available” in response to Tehran’s threats to control the maritime chokepoint after Iran was reported to have effectively created a “toll booth” in the region.
Both major oil benchmarks dropped slightly on Tuesday morning, but climbed back up later, with both the West Texas Intermediate and Brent crude remaining well above $100 a barrel.
Brent crude futures for May delivery traded just above $115 at 1 pm in Europe, while WTI crude cost more than $104 a barrel.
Most equity markets in Europe rose briefly at the open, with the Euro Stoxx 50 jumping almost 1%.
By early afternoon, the key European indexes were up by 0.3-0.5%. US futures were all in the green between 0.6% and 0.8% higher at the same time.
As for Asia, Japan’s Nikkei 225 is up 0.6%, South Korea’s Kospi has fallen over 4%, Hong Kong’s Hang Seng is trading flat, and the Shanghai Composite index is down 0.8%.
In other early Tuesday trading, gold and silver prices rose. Gold is up 1% at $4554 an ounce, while silver climbed 3.4% to $72.5 per ounce.
