Oil Prices Surge After Trump’s Speech... Jet Fuel Hits All-Time High, WTI Tops $111

WTI Hits Highest Level in 3 Years and 10 Months
U.S. Gasoline Prices Surge 36.1%
Diesel Prices Jump 46%
Europe Suffers Most from Soaring Jet Fuel Costs
UK and German Airlines Consider Cutting Routes

As U.S. President Donald Trump announced that he would continue with strong attacks against Iran, anxiety spread through the crude oil market and international oil prices surged across the board. With the war entering its second month, the continued rise in oil prices has been passed on to gasoline, jet fuel, and other fuel prices, increasing the burden on both households and businesses.

On April 2 (local time) at the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) crude for May delivery soared by $11.42, or 11.41%, from the previous session to close at $111.54 per barrel. At the ICE exchange, the price of Brent crude for June delivery surged by 7.78% from the previous session to close at $109.03 per barrel.

According to The Wall Street Journal (WSJ), the closing price of WTI marked its highest level in three years and ten months since June 2022, and for the first time in four years since 2022, WTI surpassed the price of Brent crude.

"Back to the Stone Age"... Oil Market Rocked as No Ceasefire in Sight

The catalyst for the day's oil price spike was President Trump's address to the nation. President Trump threatened Iran by announcing the previous day, "We will deliver extremely powerful blows to Iran over the next two to three weeks," and added, "We will send them back to the Stone Age where they belong."

Until the speech, the market had some expectation of a ceasefire. President Trump had claimed before the speech that "Iran has requested a ceasefire with the United States," and Iranian President Masoud Pezeshkian also stated in a public letter that "confrontation is meaningless."

However, after President Trump's speech, the possibility of a ceasefire vanished, causing significant turmoil in the oil market. In fact, on the afternoon of the 2nd, U.S. forces attacked the B1 bridge, which connects to Karaj near Iran, twice. The B1 bridge is known as a key route for Iran to supply ballistic missiles and drone parts to military units across the country. A senior official in the Trump Administration explained to the WSJ that this strike was "part of a large-scale U.S. operation to cut off military supply routes."

During the session, international oil prices gave up some gains on reports that Iran was working with Oman to establish a monitoring system for oil tanker traffic through the Strait of Hormuz. If Iran imposes tolls on ships passing through the Strait, at least some crude oil supplies could still reach the global energy market, according to this assessment.

Melissa Brown, investment decision-maker at SimCorp, commented, "Volatility is high during the session as uncertainty remains very elevated," and predicted, "Oil prices are likely to stay higher for longer." She added, "Even if oil prices eventually decline, it will take longer for gasoline prices to come down, so the economy will continue to feel inflationary pressures."

Gasoline Prices Up 36.1%... Airlines in Europe Consider Cutting Routes Due to Soaring Jet Fuel

A vessel sailing in the Strait of Hormuz prior to the outbreak of the Iran war. Photo by AFP Yonhap News Agency

Indeed, with the Iran war dragging on for over a month, the rise in gasoline prices is impacting the real economy. According to the American Automobile Association (AAA), as of this afternoon, the average national gasoline price in the United States reached $4.081 per gallon, a 36.1% jump from a month ago ($2.997). During the same period, the average price of diesel soared 46%, rising from $3.770 to $5.507 per gallon.

For diesel, the current price is just $0.31 below the record high of $5.816 set on June 19, 2022, amid the Russia-Ukraine war.

Industry is also suffering significant blows. With jet fuel prices reaching an all-time high, airlines are on high alert. According to Argus Media, the price of jet fuel in Northwest Europe closed at $1,904 per ton, up 18% from the previous session. Currently, jet fuel prices are more than double what they were before the Iran war began.

The greatest concern is in Europe. Since Russia's invasion of Ukraine, Europe has sought to reduce its reliance on Russian fuel and has increased its dependence on the Middle East. In particular, Europe sources more than half of its jet fuel from the Middle East. The United Kingdom is a prime example; last year, most of its jet fuel demand (12 million tons) was met by imports from the Middle East, including Kuwait.

Ryanair, Europe's largest low-cost carrier (LCC), has decided to review flight cancellations on a weekly basis due to surging jet fuel prices. Michael O'Leary, CEO of Ryanair, warned, "Among European countries, the UK is currently the most vulnerable to jet fuel supply disruptions," and cautioned that if supply disruptions continue due to the Iran war, summer peak season flights may have to be canceled.

He further stated, "We have hedged about 80% of our fuel needs through March next year at $67 per barrel, but for the remaining 20%, we purchased April fuel at $170 per barrel."

Carsten Spohr, CEO of Lufthansa in Germany, also said, "We are developing and reviewing scenarios to enable a swift response to changes in market conditions," adding, "This includes discontinuing unprofitable routes and early retirement of aging aircraft, for example."

This content was produced with the assistance of AI translation services.