Trump tries to curb the rising price of oil: "The war is almost over"

Washington / BarcelonaDonald Trump is trying to curb the soaring price of oil, fueled by fears that the Iran-Contra conflict will drag on. After seeing the price of a barrel of crude oil soar above $100—a level not seen since 2022, with Russia's invasion of Ukraine—the US president declared that the campaign "is almost over." "I think the war is almost over. They have no warships, they have no communication, they have no air force," the tycoon said on CBS. And the market has decided to take Trump's word for it: the price of a barrel of crude oil has fallen back below $90. The stock market, which had also opened with sharp declines due to the threat of an energy crisis, recovered shortly before the close of trading on Monday. The Dow Jones Industrial Average, which had suffered a plunge of nearly 900 points at the start of the session, rebounded by 239. Trump knew what he was doing when he made this statement on CBS, shortly before Wall Street closed. After managing to weather another day with some damage control, the president has adopted an ambiguous stance regarding his words. In his address in Florida at the Republican Party Members' Conference, the tycoon said, "We will not stop until the enemy is completely destroyed." He also insisted that the conflict "will end very quickly."

"We are more determined than ever to achieve a total victory that puts an end to this danger that has existed for 47 years," the Republican said, referring to the ayatollahs' regime. The president added, "We have already won in many ways, but we have not won enough." "We are crushing the enemy in an overwhelming display of our military strength," he continued. The Republican believes that "Iran's missile and drone capabilities have been completely destroyed" and has reported that they have sunk "46" Iranian ships.

The sense of utter confusion was even more blatant half an hour later, at the extraordinary press conference he had unexpectedly called on Monday afternoon. Trump maintained that it could be said that the war had just begun or that it was about to end. A reporter pointed out to the tycoon that his Secretary of Defense, Pete Hegseth, said that the 10 days of the campaign were "just the beginning," while he himself had said that the operation was "virtually over." "You can say it either way," Trump replied. The 79-year-old president is unable to give a single clear answer about a war that has claimed the lives of more than a thousand Iranians, including the 168 girls killed in the first bombings led by the US and Israel.

During his address, the president also sought to reassure American consumers, stating that measures are already being taken to address the rising price of oil. According to Trump, the current military campaign will result in "lower oil and gas prices for American families." While this supposed solution is being implemented, he announced: "We're going to lift some oil-related sanctions to reduce the price." Shortly before the press conference where he made this announcement, the Republican had called his Russian counterpart, Vladimir Putin, to discuss how to end the Iran-Iraq War quickly. Washington has long imposed numerous sanctions on major Russian oil companies and on crude oil imports from Russia.

Tehran's reaction was swift. The Revolutionary Guard announced that any country that expels the ambassadors of Israel or the United States will have free passage through the Strait of Hormuz. The Revolutionary Guard has responded by asserting that Iran will decide the end of the war and has threatened to halt regional oil exports if the attacks continue.

In a message to Truth Social last night, Trump responded to the ayatollahs with a further escalation of rhetoric. "If Iran does anything to stop the flow of oil through the Strait of Hormuz, it will be hit by the United States of America twenty times harder than it has been hit so far," he wrote. He added, "But I hope and pray that this does not happen! This is a gift from the United States of America to China and all the nations that make intensive use of the Strait of Hormuz."

As for the stock markets, European exchanges were awash in red on Monday morning with sharp declines, while the price of Brent crude oil – the European benchmark – soared to $119 a barrel and West Texas Intermediate (WTI) – the US benchmark – reached $1. Despite this sudden start to the day, markets gradually reduced their losses and oil prices moderated throughout the rest of the day.

Several voices have been raised to try to curb the increase in energy costs caused by the war in Iran. The G-7 – the world's seven largest economies – and the International Energy Agency (IEA) played a key role, holding a teleconference meeting that, while not agreeing to release oil reserves, did leave the door open to doing so.

Thus, in the afternoon, after the meeting, the price of Brent crude moderated its climb and fell below $100 a barrel, as did WTI, although the price remained higher than last Friday's. In fact, Brent crude has risen by around 36% since the day before the start of the US and Israeli attacks on Iran, and the price of WTI is around 40%.

French Finance Minister Roland Lescure, who hosted the emergency G-7 and IEA meeting, seemed to downplay the possibility of releasing oil reserves, stating to the media that "we are not yet" in a position to do so, but the statement... "We are prepared to take the necessary measures, including supporting the global energy supply, such as releasing reserves," said the statement released after the meeting of finance ministers, which was also attended by the heads of the International Monetary Fund (IMF), the World Bank Group (WBG), and the Organisation for Economic Co-operation and Development (OECD). The G7 ministers stressed the importance of closely monitoring the situation and developments in energy markets and pledged to meet as needed to exchange information and coordinate within the G7 and with their international partners. Since its founding in November 1974, following the oil crisis triggered by the Yom Kippur War, the IEA has implemented five interventions by drawing on the strategic petroleum reserves of member countries, including the 1991 Gulf War and hurricanes. Katrina and Rita and the invasion of Ukraine in 2022. Fatih Birol, director of the IEA, has warned the group of the deteriorating conditions in global oil markets in recent days. The Turkish executive explained to the G-7 ministers that, in addition to the challenges related to traffic through the Strait of Hormuz, "oil production has been substantially reduced," which generates "significant and growing risks" for the market.

In this regard, Birol noted that all available options were analyzed, including making the IEA's emergency oil reserves, currently amounting to more than 1.2 billion barrels, available to the market. Outside of the G-7, the IEA director indicated that he is also in close contact with the energy ministers of countries such as Saudi Arabia, Brazil, India, Azerbaijan, and Singapore to address the situation triggered by the conflict in the Middle East following the attacks by the United States and Israel.

The slowdown in the surge of oil prices has also helped to halt the stock market decline. The Ibex 35, Spain's main index, opened this Monday with a sharp drop of 3.17%. Affected by the sharp rise in the price of Brent crude, it fell below the psychological threshold of 17,000 points and stood at 16,533.4 points at 9:00 a.m. Brent crude, the European benchmark, began the day with a 16% increase, reaching $107 a barrel, its highest price since July 2022. However, by the end of the session, the Ibex 35 had closed down 0.86%. Thus, the index lost 146 points compared to last Friday, closing at 16,928 points. Meanwhile, Brent crude was trading below $100 a barrel.

Across Europe, the Old Continent's indices have also fallen, albeit unevenly. Only the French CAC-40 is performing worse than the Spanish benchmark (-1.04%). London lost 0.2%; Milan, 0.38%; and Frankfurt, 0.83%. "The conflict with Iran triggered a classic risk-aversion reaction, with investors reversing trades that had been popular earlier this year and shifting towards defensive stocks and inflation hedges," Vladimir Oleinikov, an analyst at Generali Investments, explained to Europa Press. Experts anticipate that the declines in the stock markets will depend on the duration of the conflict in the Middle East. In this vein, Bankinter argues that "it seems reasonable that the conflict in Iran will extend, in the worst-case scenario, for a few more weeks, but not months, and even less so with a Russia-Ukraine-style stalemate. Among other things, this is due to the practical consequences for US domestic politics."

The US dollar appreciated 0.20% against the euro, trading at an exchange rate of 1.1594 greenbacks per euro at the close of European equity markets. "The dollar has consolidated its position as the ultimate safe-haven asset thanks to its deep liquidity, while also being strengthened by the rebound in oil prices – the United States is currently a net energy exporter –," they explain. fintech Ebury. Gold and Bitcoin, two other safe-haven assets, were trading, the former above $5,000 an ounce and the latter near $69,000.

Meanwhile, in the fixed-income market, the yield on the 10-year Spanish sovereign bond fell slightly to 3.336%, from 3.351% at Friday's close. This puts the risk premium at 49.19 basis points. The yield on Spain's 10-year bonds has risen by more than 270 basis points from 3.064% on Friday, February 27. This increase mirrors that of other countries in Europe.

The Euribor rebounds

The Euribor, the benchmark interest rate for the interbank market, rose on Monday to its highest level since March 2015 for the 12-month variable rate, amid volatility in both financial and commodity markets. Specifically, the rate reached 2.367% on Monday, a level not seen since March 2015. In recent weeks, the Euribor had been falling to around 2.2% at the end of February, but in light of recent events, it has recovered all the ground lost over the past year.

Meanwhile, natural gas for one month's delivery on the Dutch TTF market, the benchmark in Europe, which rose as much as 30% at the opening to €69 per megawatt hour (MWh), was trading overnight at €56.02, a 5.66% increase. The rise in gas prices, in addition to affecting household and business budgets, has a direct impact on electricity bills. The average price of electricity on the wholesale market, known as poolThe price of electricity will soar to €136.86 per MWh this Tuesday, approaching the highs recorded in February 2025, according to the latest data published by the Iberian Energy Market Operator (OMIE).

The IMF warns: "Think the unthinkable and prepare."

Given the current market situation, the International Monetary Fund (IMF) has recommended that all countries prepare for the unthinkable. "My advice to policymakers around the world in this new global environment: think about the unthinkable and prepare," warned IMF Managing Director Kristalina Georgieva on Monday during a conference in Tokyo. In this regard, the Bulgarian economist urged countries to focus "on what they can control" and advocated for investment in strong institutions to underpin robust economies and private sector-driven growth, as well as agility. As a general rule, Georgieva noted that every 10% increase in oil prices, if sustained for most of the year, will translate into a 40 basis point increase in global headline inflation. Furthermore, this increase in oil prices could also lead to a 0.1% to 0.2% drop in global GDP growth.

For its part, the European Commission has assured that the impact of the war in the Middle East on European energy markets "is limited in the short term" and that supply to Europe is guaranteed. "The situation is under control," stated Anna-Kaisa Itknonen, spokesperson for the European Commission's Energy Department, on Monday. "Europe is well prepared despite its exposure to global markets; we have a well-diversified supply," she insisted, and reiterated that the effects "are limited for now because the EU does not import oil or gas from Iran." However, she admitted that there is concern about rising prices, and therefore Brussels "has measures in place" to address a potential energy crisis.

Eurogroup President Kyriakos Pierrakakis has indicated his openness to implementing measures to address the economic consequences of the ongoing conflict in the Middle East. He suggested the possibility of adjusting the package of measures already approved by the European Union in 2022 following the Russian invasion of Ukraine. Speaking ahead of the Eurogroup meeting in Brussels, the Greek finance minister stated: "We are open to discussing measures. Everything will depend on how the crisis unfolds in the coming weeks. We have a set of tools that we have developed, along with two others, both related to Ukraine," Pierrakakis said. However, he indicated that the point of implementing such measures has not yet been reached.