Oil prices pushed past $91 a barrel on Friday afternoon, as Donald Trump demanded “unconditional surrender” from Iran, raising fears of a prolonged conflict that will impact global oil supplies.
Brent crude (BZ=F) futures were up 6.54% at $91.00 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) rose by over 9% to $9.63 a barrel.
Prices soared after the US president wrote on Truth Social that there would be “no deal with Iran except UNCONDITIONAL SURRENDER”.
The US-Iran conflict has disrupted oil and gas production and brought shipping to a standstill in the critical shipping route, the Strait of Hormuz – raising fears about the impact on the global economy.
The sharp rise came after oil prices slipped earlier in the session, following reports that the Trump administration was potentially considering intervening to help deal with the recent surge in prices.
Read more: London markets up as Strait of Hormuz remains closed
Matt Britzman, senior equity analyst at Hargreaves Lansdown, earlier said: “Potential measures under discussion include releasing crude from US emergency reserves, granting waivers on fuel-blending requirements, and even allowing the US Treasury to trade oil futures.”
The US issued a 30-day waiver for Indian purchases of Russian oil on Thursday evening.
However, Britzman highlighted that oil has still jumped nearly 20% this week and could have ramifications for the global economy.
“Higher prices tend to feed through to consumers almost immediately via rising petrol costs, which in turn risks reigniting inflation pressures just as central banks were hoping for some relief,” Britzman said.
Geopolitical turmoil has also buoyed demand for gold as a so-called safe haven asset, driving prices higher on Friday morning.
Gold futures (GC=F) were up nearly 1% at $5,128.30 per ounce at the time of writing, while spot gold added 0.6% at $5,111.18 an ounce.
Despite Friday’s rise, Hargreaves Lansdown’s Britzman pointed out gold prices were still on track for their first weekly decline in five weeks, which he said “may come as a surprise given the ongoing geopolitical tensions”.
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“While the Middle East conflict has boosted demand for safe-haven assets, the resulting surge in oil prices has stoked fresh inflation concerns, prompting traders to dial back expectations for rate cuts,” he said.
“Markets are now pricing in just one US cut this year, down from two earlier in the week, after surging oil prices and a run of solid US data pointed to continued economic resilience.”