US crude jumps more than 11% after Trump vows more attacks on Iran

By Arathy Somasekhar

HOUSTON, April 2 (Reuters) – U.S. oil prices jumped more than 11%, while Brent soared 7% on Thursday in volatile trading, as traders worried about prolonged disruptions to oil supply the day after President Donald Trump said the U.S. would continue attacks on Iran.

Brent crude futures were up $6.34, or 6.3%, to $107.5 a barrel at 1610 GMT (12:10 a.m. ET). U.S. West Texas Intermediate crude futures were up $11.19, or 11.15%, at $111.27 per barrel. WTI hit a session high of $113.97 a barrel, its biggest absolute price rise since 2020.

WTI, whose price is generally below Brent’s, was pricing nearly $3 over Brent. It was the highest premium U.S. crude futures have commanded over the global benchmark in a year.

Still, both benchmarks remained below highs near $120 a barrel touched earlier in the conflict.

Trump said military operations would be intensified, but did not specify a timeline for ending hostilities.

“We’re going to hit them extremely hard over the next two to three weeks,” Trump said. “We’re going to bring them back to the Stone Ages where they belong.” 

He gave no details on any steps that could lead to a reopening of the Strait of Hormuz. Dozens of countries have been seeking ways to restart vital energy shipments through the Strait. 

Iran is drafting a protocol with Oman to monitor traffic in the strait, an Iranian foreign ministry official said, after a Bloomberg report.

“Crude futures are trading sharply higher in early trade as the near-term war sentiment has turned to further escalation before de-escalation,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“The real question on traders’ mind is that if Iran’s oil infrastructure is possibly now at risk, and with more damage in the area now very likely, even if left intact, the re-start of oil flows in the region are now looking to be delayed further,” Kissler said.

Federal Reserve Bank of Dallas President Lorie Logan said Thursday that a swift war resolution may mean economic impact might be pretty moderate, adding that the economic outlook was uncertain due to the crisis. The U.S. has some buffers to impacts from the war, Logan said.  

Brent crude prices could average $95 a barrel in the base case and $130 a barrel in the bull case in the second half of the year, Citi said.

BRITAIN HOSTS TALKS ON REOPENING HORMUZ

Britain is hosting a virtual meeting of around 40 countries to discuss options for reopening the Strait of Hormuz. The U.S. is not due to attend.

Some market participants said they had stopped dealing with cargoes priced off the Dubai Middle East benchmark, normally used to value nearly a fifth of global crude supply, because ports inside the Strait of Hormuz cannot be used.

OPEC+, meanwhile, is likely to weigh a further oil output increase on Sunday, sources said. This would position members to add more barrels should the Strait of Hormuz reopen but is not likely to meaningfully increase supply before then.

In Russia, Ukraine’s strikes on port infrastructure, pipelines and refineries have reduced export capability by 1 million barrels per day, or a fifth of total capacity, sources say, enough to set the stage for imminent production cuts.

The head of the International Energy Agency also warned that supply disruptions would start to affect Europe’s economy in April, after the region had previously been shielded by cargoes contracted before the start of the war.

(Additional reporting by Colleen Howe and Sudarshan Varadhan. Editing by Stephen Coates, Mark Potter, Louise Heavens and David Gregorio)