Oil prices rose on Wednesday after markets shrugged off President Donald Trump’s proposal to deploy the U.S. Navy to escort oil tankers through the Strait of Hormuz, a move aimed at calming traders’ concerns about the security of global energy supplies.
As of this writing, Brent crude oil (BZ=F) futures were up 2.6% at $83.53 a barrel, while West Texas Intermediate crude oil (CL=F) was up 2.3% at $76.29 a barrel.
Oil prices were pushed higher due to tensions surrounding the Strait of Hormuz. About 20% of the world’s oil and natural gas flows through this narrow waterway. Concerns about potential disruptions have unsettled markets in recent sessions, adding to volatility.
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Iran’s Revolutionary Guards claim “complete control” of the Strait of Hormuz and have warned that any ship trying to pass through the waterway will be targeted.
Trump sought to reassure investors that Washington was ready to ensure safe passage for tankers. He wrote on his “Truth Social” platform: “If necessary, the U.S. Navy will begin escorting oil tankers through the Strait of Hormuz as soon as possible.” He added: “No matter what, the United States will ensure the free flow of energy to all parts of the world.”
Despite the pledge, traders remained cautious, arguing that continued reductions in flows through the Strait could quickly lead to tight global supplies.
“Naval convoys will be targeted by Iranian attacks,” said ING’s Warren Patterson.
“As a result, the United States may choose to wait until it determines that Iran’s offensive capabilities have declined before escorting the ships.”
Goldman Sachs (GS) raised its average Brent crude oil (BZ=F) price forecast for the second quarter of 2026 by $10 to $76 per barrel, and raised its average WTI (CL=F) price forecast by $9 to $71 per barrel.
The bank said its revised outlook assumes reduced oil flows through the Strait of Hormuz will lead to sharp declines in OECD inventories and Middle East oil production in March.
“If Hormuz crude production remains flat over the next five weeks, Brent crude (BZ=F) prices could reach $100, a level associated with greater demand destruction to prevent inventories from falling to extremely low levels,” the bank said in a note.
JP Morgan estimates that if the Strait of Hormuz remains closed, crude oil supplies from Iraq and Kuwait will be shut down within days, with supply losses expected to be as high as 4.7 million barrels per day.
ANZ raised its forecast for the average Brent crude oil price (BZ=F) in the first quarter of 2026 to US$90 per barrel and its LNG forecast to US$17 per barrel per mmBtu.
Gold prices rose on Wednesday as escalating conflict in the Middle East roiled global markets and revived demand for safe-haven assets.
As of this writing, gold futures (GC=F) were up 0.9% at $5,169.50 per troy ounce, with spot prices up 0.1% at $5,166.08.
This follows a sharp sell-off in the previous session, when gold prices fell more than 4% to their lowest levels since February 20. Gold prices fell on a stronger U.S. dollar and fading expectations for imminent interest rate cuts, as rising oil prices (BZ=F, CL=F) stoked concerns that inflation could remain high amid worries about a protracted war.
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“Escalating geopolitical tensions in Iran have led to higher oil prices, exacerbating inflation concerns and complicating the outlook for monetary easing,” said OCBC strategist Christopher Wong.
“Fundamentals [for gold] No substantial changes have occurred. Structural drivers such as geopolitical uncertainty, policy unpredictability and the need for portfolio diversification remain intact,” Huang added.
Investors expect the Fed to keep interest rates unchanged at the end of its two-day meeting on March 18.
The pound held steady against major currencies on Wednesday, although the dollar strengthened on safe-haven assets amid escalating conflict in the Middle East.
The pound was stable against the US dollar at $1.3346 and against the euro at €1.1497.
The U.S. Dollar Index (DX-Y.NYB), which measures the greenback against a basket of six major currencies, rose to 99.07 as investors sought safe-haven assets.
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A conflict-related surge in oil (BZ=F, CL=F) and natural gas (NG=F) prices reignited inflation concerns, prompting traders to scale back bets on further monetary easing by the Bank of England (BoE). Despite overall strength in the US dollar, the revaluation helped limit the pound’s losses.
According to market pricing, the probability of the Bank of England cutting interest rates later this month has dropped sharply, from about 80% last week to below 20%.
On the equity market, the FTSE 100 index (^FTSE) was flat on Wednesday morning, trading at 10,493 points after two days of selling that wiped more than £100 billion off company value. For more details on market moves, check out our live coverage here.
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