Brent crude oil soars 5% on Thursday as President Trump downplays Iran deal

Crude oil prices soared over 5% on Thursday after reports indicated renewed possibilities for hostilities in the region. Brent crude prices hit $105 per barrel on Thursday as fears of supply disruptions brought uncertainty amongst investors. Similarly, WTI crude oil prices also surged to $92 per barrel, erasing all the weekly losses. Crude oil prices now trade 2% up for the week, starting from a 4% drop at the start of the week.

Why are crude oil prices rising?

The diplomatic standoff between the US and Iran has worsened after President Trump said on Wednesday that he no longer wants a deal with Iran. Furthermore, reports also indicate that the White House has asked the Pentagon to draw up a strike plan on Iran before the mid-term elections next month. On the other hand, attacks on the Gulf and Strait of Hormuz intensified, with Houthis initiating attacks on Saudi Arabia.

In the Gulf of Mexico, oil production companies like Shell and Chevron have started evacuating personnel from the region ahead of Tropical Storm Isacias, curbing production. As of Wednesday, 21% of the production in the Gulf of Mexico has been shut down due to the storm, according to the Marine Minerals Administration.

The current week saw immense volatility in crude oil prices and the news flow, turning sharply negative from positive at the start of the week. The previous week ended with news that supply resumed to pre-war capacity from the region in the last four days of September. Additionally, the Saudi Energy Minister also said the crude oil supply from the East-West pipeline reached 5.8 million barrels per day. Markets shrugged off the positive news and turned back to uncertainty as hostilities in the region increased in the last 48-hours.

MCX crude oil price

MCX crude oil prices soared 4.79% on Thursday evening at ₹8,961 per barrel, after opening at ₹8,637 per barrel. On the daily charts, crude oil prices on MCX futures have surged above the 20 EMA level of ₹8,870 per barrel, indicating a sharp reversal from the lower prices witnessed last week.