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【Intro】Oil surges 13%

China Fund News reporter Taylor

Brothers and sisters, things tonight are not looking good. U.S. stocks fell by 700 points in the pre-market, and crude oil jumped about 12%. So, how about it—Trump, please TACO一下 at TACO once before the U.S. market officially opens!

On the evening of April 2, oil prices rose again. Previously, Trump warned that within the next two to three weeks, the U.S. might take further military action against Iran, which dashed market expectations that near-term tensions would cool.

U.S. May-delivery WTI crude oil futures surged 13%, to $113 per barrel; June-delivery international benchmark Brent crude oil futures rose 8%, to $109 per barrel.

Silver plunged 7%, and gold fell nearly 4%.

At the same time, European diesel futures prices jumped again, breaking above $200 per barrel for the first time since 2022.

This rally came after Trump’s rare address to the nation during the “golden hour.” In his speech, he portrayed the war as “a success,” and said the U.S. would launch a strong strike against Iran in the next two to three weeks. He also said that after the conflict ends, the Strait of Hormuz would “naturally resume opening,” but he did not provide specific details or a timeline.

French President Macron said that trying to reopen the strait through military means is not realistic.

Although the market is paying close attention to crude oil prices, the refined products market is rising even more sharply. Europe’s diesel soared again on Thursday, further highlighting that the global economy may face an inflation shock. Due to tight supply, buyers in different regions are competing for spot cargos; some oil tankers even reroute thousands of miles to secure fuel.

If shipping through the Strait of Hormuz cannot be restored, there is almost no hope of easing pressure in the oil market. Currently, the Brent crude price is already up about 50% from before the outbreak of the war.

Analysts said: “Trump’s speech did not change the market’s underlying reality: the strait has effectively been closed for a month, and supply is still subject to substantial restrictions. At least these interruptions will persist for several weeks, possibly longer.”

Before Trump’s speech, oil prices had once fallen, and global markets rebounded—because he had hinted that the conflict could end within weeks. But this White House address again added uncertainty, and he also once again threatened to strike Iran’s oil infrastructure.

In addition to the surge in diesel prices, the market has shown another dangerous signal: refineries cannot get enough crude oil. The front-month WTI contract is trading at a premium of more than $11 per barrel over the next-month contract, the highest level in history (normally only a few cents). This shows supply is extremely tight.

Although crude oil futures closed on Wednesday at about $101, Brent—the benchmark that determines real crude oil pricing—has reached $128, indicating that the spot market is far tighter than futures.

In his White House remarks, Trump said the war is “very close to being over,” but also said that military action would quickly escalate. He added, “Over the next two to three weeks, we will send them back to the ‘Stone Age’,” and demanded that the countries shipping oil through the Strait of Hormuz take responsibility for providing escort.

Analysts noted: “Trump’s consistent, vague statements mean that multiple military options are simultaneously on the table in the short term. As long as the path for tension to cool remains unclear, the market will continue to swing violently.”

Due to the Easter holiday, crude oil futures will be closed for trading on Friday, meaning the market will experience a longer “no price fluctuation window.”

Iran, meanwhile, has responded firmly. Iran’s foreign minister said the future of the strait will be jointly decided by Iran and Oman. Iranian state media cited a statement from the Islamic Revolutionary Guard Corps saying that the navigation routes will not be reopened due to the U.S. president’s “absurd show.”

With the conflict nearing its sixth week, Trump has been wavering between “we are about to reach an agreement” and “preparing to escalate the war.” He has already sent a final ultimatum to Iran via Vice President Vance: either reach an agreement, or face key infrastructure being targeted.

Iran said that the military “is prepared for any scenario,” and that the conditions proposed by the U.S. are “extreme and unreasonable.”

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Responsible editor: Yang Hongbu