Trump's Influence on Oil Markets Amid Conflict
It remains challenging to determine the precise factors guiding Donald Trump a month into the US and Israel's campaign of strikes on Iran. However, it is evident that he is closely monitoring the oil markets.
Historically, a word or social media post from the US president regarding his intentions has triggered significant price movements, as investors interpreted these signals as indicators of potential escalation or resolution of the conflict.
Recently, however, traders seem increasingly skeptical about the impact of his statements.
Before 28 February, when the strikes on Iran commenced, oil was trading at approximately $72 (£54) per barrel. Last week, it reached a peak of $118 per barrel on 19 March and, as of Friday afternoon, was just below $112—markedly higher than the pre-conflict price.
The following highlights key moments over the past month where Trump’s actions and the oil markets appeared to interact with varying outcomes.
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Market Sensitivity to Geopolitical Signals
Jonathan Raymond, investment manager at Quilter Cheviot, explains that energy prices have become a proxy for broader geopolitical and economic risks. Prices spike when Trump’s language intensifies and ease when his rhetoric softens.
"Investors are trying to price genuine uncertainty,"
he says. "Markets can look skittish or confused, but what they're really doing is managing event risk in real time, with oil sitting right at the centre of that."
Raymond emphasizes the market's sensitivity to these signals due to the significant economic risks associated with rising oil prices.
Challenges in Trading Amid Rhetoric
Brian Szytel of the Bahnsen Group notes the difficulty investors face in determining trading strategies, especially as some of Trump’s comments appear designed to influence oil prices rather than convey policy.
"As they say, the first casualty of war is truth,"
he says. "I suspect some of the rhetoric back-and-forth around productive talks, and the opposite, very much are centred around just moving the price of oil."
On Thursday, shortly after US stock markets experienced their largest drop since the onset of the Iran war, Trump announced that talks with Iran were progressing "very well" and that he was postponing military strikes on Iran's energy infrastructure until at least 6 April.
Despite this announcement, oil prices continued to rise.
Market Reactions and Investor Sentiment
Jane Foley, head of FX strategy at Rabobank, observes that market reactions are "becoming more muted" due to the "huge gap" between Trump’s reassurances and Tehran’s lack of acknowledgment.
"Given the optics, many investors can not see an early end to the conflict and markets remain anxious."
Russ Mould, investment director at AJ Bell, adds that markets have grown accustomed to Trump frequently altering his stance in response to political, stock market, or economic pressures.
"There is a degree of scepticism, or even downright cynicism, creeping in at the edges,"
he says.
Additional reporting by Naomi Rainey
