U.S. President Donald Trump stated on Thursday that the United States no longer needs a deal with Iran. His comments came just days after he suggested that the ongoing conflict was nearing an end. Trump wrote on Truth Social, "We don't need a deal with Iran. Those days have long since passed," asserting that the U.S. has control over Iran's finances and the Strait of Hormuz.
Key Details
Following Trump's remarks, oil prices experienced volatility. Brent crude briefly rose to $94 per barrel before settling around $93.79, up approximately 1.1% on the day. This shift marked a reversal from the previous decline in oil prices, which had fallen roughly 25% from a late-October high of $118 as traders reassessed geopolitical risks. Analysts noted that Trump's comments have raised concerns about potential further military actions against Iran, which could disrupt oil supplies.
Background
In the wake of these developments, U.S. Treasury yields also rose. The yield on two-year notes increased by 10.79 basis points to 4.835%, the highest since mid-October. The yield on benchmark 10-year notes rose by 6.53 basis points to 5.054%. Analysts indicated that the market is now considering the possibility of a larger-than-usual Federal Reserve rate hike in December, driven by inflation concerns linked to rising energy prices.
The fluctuations in oil prices could affect energy sector stocks and inflation expectations, influencing Federal Reserve policy decisions. Higher oil prices may lead to increased input costs across various sectors, potentially prompting a stronger response from the Fed. Investors will watch for upcoming economic data releases and Fed announcements that could signal shifts in monetary policy.
Based on reporting by: oilprice.com, businesstimes.com.sg