Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Has Trump’s unpredictability broken the oil market? – Full Analysis.
Oil prices jumped last night after Donald Trump said the Iran conflict was “nearing completion”. Despite the US president saying the attacks on Tehran would end in “two to three weeks” and America doesn’t “need their oil”, the markets were not soothed.
“A word – or social media post” – from Trump “used to spark big moves in prices”, said the BBC. Investors would leap on “signs” that things “could escalate or come to an end”. But now traders seem “to be growing more sceptical about the value of his comments”.
At the outset of the conflict, oil prices were “sensitive to Trump’s comments” but his view of the war “seems to change hour by hour”, said Tom Saunders and Eir Nolsoe in The Telegraph. “His stream of often contradictory statements” have made many wonder “whether they can trust the messaging” coming from the US administration, and some traders have drawn back from the market, “leaving prices increasingly untethered from reality”.
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However many solutions to the current global oil crisis Donald Trump comes up with, the oil market isn’t listening anymore – “and the price of oil keeps rising”, said Matthew Lynn in The Spectator. There’s simply no point in Trump “trying to talk the price of oil back down again. It just won’t work.”
His “Persian Taco” tactic “may have run its course”, said Eduardo Porter in The Guardian. “Making extreme threats” and then walking them back may “provide Trump with the illusion of agency” but he “no longer has control of events in Iran”. The markets are “figuring out” that it will probably be Tehran, not the US, that gets to decide when the conflict ends.
What’s next?
And yet, “after nearly three weeks of this conflict”, the global financial system is “functioning without panic or alarming signs of stress”, said Zachary Karabell in the The Washington Post. “It’s important to distinguish between price movements” and stability. “The smooth functioning” of the financial system, “in the face” of crises like the oil shock, “gets little attention, probably because stability is not news”. But central banks, financial institutions and governments have “improved at monitoring” risks, and that should “at least provide some relief in a world full enough of fears”.