- The economist highlighted the “staggering” volatility in oil prices, noting how they surged from about $70 a barrel to almost $120, and then settled around $80 within seven days of the war.
- He said that the ongoing war, the growing misalignment of incentives among the U.S., Israel, and Iran, and the complexities of energy supply chains suggest that oil price volatility is far from over.
- Meanwhile, White House press secretary Karoline Leavitt clarified on Tuesday in a press briefing that the U.S. Navy has not escorted a tanker or a vessel from the Strait of Hormuz yet.
Mohamed El-Erian, Egyptian-American economist and Chief Economic Advisor at Allianz, said on Tuesday that he expects the volatility in oil prices to continue amid the ongoing war in the Middle East.
In a post on X, El-Erian said, “FWIW, I expect this turbulence to persist: The ongoing conduct of the war, the growing misalignment of incentives between the three main countries ( US, Israel, and Iran), and the inherent complexities of energy supply chains suggest that volatility is far from over.”
The economist highlighted the “staggering” volatility in oil prices, noting how they surged from about $70 a barrel to almost $120, and then settling around $80 within seven days of the war.
Oil Fluctuations On War
Crude oil prices hit almost $120 a barrel on Monday as markets grappled with concerns over the war causing long disruptions to energy supplies from the Middle East even as the important Strait of Hormuz was choked.
However, later in the day, oil prices declined after U.S. President Donald Trump indicated that the Iran war was likely near its end and also added that he was contemplating “taking it (Strait of Hormuz) over.”
On Tuesday, WTI crude oil continued its volatile swings, plunging over 16% to be below $77 per barrel amid a reported post from the U.S. Energy Secretary Chris Wright on X that said that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz. As per NBC News, the post was deleted shortly after.
However, White House press secretary, Karoline Leavitt, clarified on Tuesday in a press briefing that the U.S. Navy has not escorted a tanker or a vessel from the Strait of Hormuz yet, adding that it was still “an option” that Trump would utilize if necessary.
At the time of writing, WTI crude had climbed higher and was trading around $85.56 per barrel. Meanwhile, ICE Brent crude was trading around $89.91 per barrel.
“Another super wild day in the oil market as prices plummet following President Trump’s speech yesterday evening, an unconfirmed report of the US military escorting a tanker through the Strait of Hormuz, and a multi-country agreement on a possible coordinated release of strategic reserves,” El-Erian said in his post.
Market Movement
Meanwhile, U.S. equities were in green in Tuesday’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.15%, the Invesco QQQ Trust ETF (QQQ) climbed up 0.28%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.27%.
The United States Oil Fund (USO), which tracks WTI crude oil, was down 1.16% at the time of writing.
Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory, while that of USO was in the ‘extremely bullish’ territory.
For updates and corrections, email newsroom[at]stocktwits[dot]com.