President Donald Trump’s surprise pledge that the United States would not resume airstrikes against Iran before the midterm elections failed to reverse a sharp jump in oil prices Thursday.
“We will not be attacking Iran at any time prior to the Midterm Elections to be held in the United States on November 3rd,” Trump wrote on his social media site, adding that the U.S. was having “productive discussions with the Islamic Republic of Iran.”
Trump’s statements have been a significant driver of daily moves in the oil market since the start of the war with Iran in February. But Thursday, after a brief price dip, oil markets largely shrugged off his announcement.
After having risen as high as almost $106 per barrel, Brent crude oil closed at $104.28, a rise of 4%. U.S. crude oil also ended the trading session up 3.6%, at $91.49, after having jumped to nearly $93.
Other critical energy prices also looked past Trump’s post. Benchmark diesel futures spiked 6% in European trading. Heating oil, a proxy for jet fuel, rose more than 5%.
In addition to the elevated Iran risk, oil prices Thursday reflected traders’ concerns about reports of Iranian proxy attacks in Saudi Arabia.
Hurricane Isaias also figured into the price of oil. Major oil companies with rigs in the Gulf of Mexico announced that work had been suspended at several locations and that crews had been evacuated as a precaution.
Trump’s post appeared to be a direct response to reports by NBC News and other outlets that he was considering strikes on Iran before the Nov. 3 midterms.
NBC News and others noted that Trump had not yet made a final decision, however.
Key bond yields also dropped following Trump’s post. The 10-year yield, which heavily influences consumer borrowing rates, fell to its lowest level since Friday.
Stocks also faced a day of choppy trading, but ultimately they were largely unaffected by Trump’s announcement.
Earlier this year, a post like Thursday’s from Trump would have almost certainly driven major indexes sharply higher.
Instead, the broad S&P 500 closed down 0.5% on Thursday and the Nasdaq Composite fell 1.2%. The Russell 2000, which tracks small and midsize companies, closed flat.
News from the tech sector that raised questions about OpenAI’s revenue also helped drag stocks lower.
Trump’s decision could have been motivated by any number of factors. But with the midterm elections less than a month out and early voting underway, any substantial action by the Trump White House would be likely to have at least some impact on voter attitudes.
It could also risk raising oil prices even higher.
For months, Iranian attacks on commercial shipping have reduced traffic through the Strait of Hormuz, a critical artery for global oil supplies, to just a small fraction of prewar levels.
From Sept. 28 through Sunday, daily traffic in the strait averaged fewer than 23 ships a day, according to data from MarineTraffic. Before the war, hundreds of ships per day passed through the waterway delivering crude oil and related products to global markets.
Oil and commodities market experts have repeatedly warned that any escalation in the fighting in Iran would cause oil prices to trend even higher.
“The market remains exposed to significant risks,” Bank of America’s head of global commodities, Francisco Blanch, wrote in early September. If skirmishes curbing oil flows continued into the year’s end, he wrote, Brent could trade in a $95-to-$120-per-barrel range.
“Meanwhile, a broader conflict resulting in major energy infrastructure damage may spike prices” as high as $150 per barrel, he added.
The cost to ship crude oil from countries that are not directly affected by the closing of the strait has also reached new highs as producers scramble to meet demand.
It now costs $77 million for a crude carrier to move U.S. oil to Asia, according to Bloomberg, which cited data from the Baltic Exchange in London. The average price for the same route last year was just $9.2 million.
The continued elevation of crude oil prices has caused retail gas prices to remain high for U.S. consumers, many of whom have helped make gas prices a major issue in scores of midterm congressional races.
On Thursday, the national average price for regular unleaded gas was $4.36 per gallon. That is more than 45% higher than when the U.S. and Israel launched the war against Iran on Feb. 28.
Diesel fuel prices have soared even more, spurred by recent escalations in the Russia-Ukraine war. At $6.28 per gallon Thursday, diesel has risen almost 70% since Feb. 28.
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