Rabobank’s Senior Market Strategist Benjamin Picton notes that Brent briefly fell below $100 before Donald Trump’s national address reversed risk sentiment, sending Oil higher and bond yields up. He highlights renewed concerns over the Strait of Hormuz, potential extended conflict with Iran, and the risk that freedom of navigation may not be restored before US withdrawal, threatening global hydrocarbon flows.

Trump remarks revive Oil risk premium

"Wednesday saw the unusual occurrence of three Anglosphere heads of government delivering televised addresses to their respective nations within 24 hours of each other. When news broke that Australia’s PM Albanese, Britain’s PM Starmer and US President Trump would all be interrupting regular programming to speak to their people, reactions ranged from jubilant speculation that the war is about to end all the way through to nervousness that Operation Iranian Freedom was about to be announced."

"Judging by the price action in markets, the latter was certainly seen as the less likely of the two as stocks rose sharply across Asia, EMEA and the Americas, while Brent crude briefly dipped below the $100/bbl mark."

"Those moves are now revealed as an April Fool’s rally as Donald Trump’s address to the nation has sent oil bid, bond yields surging, high-beta FX lower and early rallies in Asian stocks have now turned deeply negative."

"Critically, Trump also seemed to confirm rumours that the US is willing to leave without first securing freedom of navigation in the Strait of Hormuz, instead leaving that task to other countries (though he says the US will help) on the justification that they are far more reliant on Persian Gulf oil than the US is."

"Trump said that the Strait will ultimately re-open naturally when the war concludes as Iran will rely on oil sales to rebuild, but in the meantime he advises other countries to buy their oil and gas from the United States."

"If nobody steps up the war may grind on for longer (bad), escalate (worse), or the US may simply leave with Hormuz unresolved (worst)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)