Oil prices surge as Trump urges Tehran evacuation
Crude oil prices increased by more than 2% on Tuesday after former President Donald Trump called for the evacuation of Tehran, coinciding with Israel and Iran exchanging attacks for the fifth day in a row.
U.S. crude for July delivery rose by $1.58, or 2.2%, reaching $73.35 per barrel, whereas Brent crude for August climbed $1.82, or 2.49%, to $75.05.
This increase follows a drop on Monday when reports indicated that Iran was exploring a ceasefire with Israel.
“Put simply, IRAN MUST NOT POSSESS A NUCLEAR WEAPON,” the president stated on his social media site, Truth Social. “I have said this repeatedly! Everyone should evacuate Tehran immediately!”
Oil futures have surged about 7% since Israel began airstrikes on Iran’s nuclear and missile facilities last Friday, but the broader effect on the market has been limited.
Amos Hochstein, a former energy advisor to President Joe Biden, mentioned that the market has remained stable due to robust global supply.
He pointed out that OPEC+ is increasing its production, and U.S. output is at record highs, which is helping to stabilize prices.
Initially, oil traders were worried that Israel might strike Iran’s oil infrastructure to cripple its economy. While some domestic energy facilities have been targeted, Israel has so far refrained from hitting export facilities, alleviating concerns about a larger impact on global oil supply.
“What the market is observing is a confidence that Israel can continue its military actions against Iran without the Iranians being able to effectively retaliate,” Hochstein commented during CNBC’s “Squawk Box” on Tuesday.
Iran is the third-largest oil producer within OPEC, exporting around 1.6 million barrels per day, mainly to China, according to OPEC and Energy Information Administration data.
Hochstein cautioned that markets might be underestimating the risk of Israel attacking Iran’s export facilities, which could cause significant disruptions to global supply.
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