Phil Flynn of the Price Futures Group on oil’s slide amid the coronavirus.
Oil prices spiked Wednesday morning after President Trump threatened action against Iranian gunboats that have been harassing U.S. ships.
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West Texas Intermediate crude oil, the U.S. benchmark, gained 32 percent to $15.29 a barrel after having fallen to an overnight low of $10.26. WTI was trading at $11.37 ahead of the president’s tweet.
Brent crude, the international benchmark, was higher by 11 percent at $21.49.
GAS PRICES TO STAY CHEAP AFTER CORONAVIRUS SLIDE
“I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea,” Trump tweeted.
Trump’s statement comes after 11 Iranian vessels last week operated dangerously close to U.S. ships in the Persian Gulf. Earlier on Wednesday, Iran said it launched its first military satellite into orbit.
Wednesday’s rebound amid rising geopolitical tensions comes after WTI crude oil for June delivery plunged 60 percent this week amid worries about demand destruction caused by COVID-19 and ballooning supplies due to the price war between Russia and Saudi Arabia.
While Trump’s comments have provided a short-term lift, they’re unlikely to keep prices elevated.
“You can’t talk oil prices higher. You can’t talk oil prices higher by threatening military action,” Stephen Schork, founder and editor of the daily oil subscription newsletter The Schork Report, told FOX Business.
“The economies have to open up, and they’re closed,” he added. “And that’s the bottom line. So without demand, you’re not going to get any sort of meaningful rally in oil.”
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A weekly U.S. crude oil inventory report will be released at 10:30 a.m. ET.
