Trump Promises Drop in $111 Oil: Iran War Is Ending

While US President Donald Trump stated that $111.70-level Brent crude prices will drop dramatically with the end of the Iran war, the impact of rising energy costs on markets through global consumer price inflation (CPI) and foreign trade channels is being monitored.

How will Trump's statements affect oil prices?

In the final session before the weekend when markets were closed, sharp gains were recorded in energy commodities. While Crude oil (WTI) traded with a 3.82% gain at the $103.27 level at the last close, the session range materialized between $98.84 and $103.92. The benchmark Brent crude, meanwhile, rose from the $108.66 level in the previous session by recording a 2.80% increase to reach the $111.70 level. In the same session, natural gas prices dropped with a 3.36% loss to the $3.05 level.

Speaking at a midterm election rally held in the US state of Georgia, Trump provided details regarding military operations targeting the Tehran administration. Stating that 159 of Iran's ships were sunk and 268 of its aircraft were disabled, Trump reported that the 1st and 2nd tier leadership was eliminated. Recalling that he had terminated the nuclear deal (JCPOA) signed by the Barack Obama administration in the past, Trump said that Iran's nuclear enrichment capacity was decimated through Operation Midnight Hammer and Operation Epic Fury, and that they would never be allowed to acquire nuclear weapons.

Will shipments in the Strait of Hormuz relieve the market?

Announcing that oil-laden tankers waiting in the Strait of Hormuz will be swiftly evacuated from the region, Trump argued that oil prices will fall sharply in a very short time once the war ends. For Turkey's markets, which are a net energy importer, oil prices above $111 per barrel create cost pressure directly through the energy bill, foreign trade deficit and exchange rate channels; meanwhile, the scenario of opening up shipments through the strait and halting the war stands as the main channel that would ease industrial costs and the consumer price inflation (CPI) outlook.

This content is for information purposes only and does not constitute investment advice.