Trump's Comments Send Oil Prices Soaring Amid Strait of Hormuz Concerns

Oil prices rose on Tuesday as traders grew concerned about global supplies after US President Donald Trump's comments at the UN General Assembly. In a speech, Trump stated that a peace deal with Iran could come after the US midterm elections in early November, but also warned that without a deal, he could 'annihilate' Iran.

Before Trump's comments, there were hopes for stability in the Middle East and perhaps even progress in ending Russia's 4-1/2-year-old war in Ukraine. However, flows through the Strait of Hormuz increased in recent days, which may indicate that Saudi Arabia is taking steps to increase oil exports.

Saudi Arabia has restarted operations at its East-West Pipeline and could resume exports from Yanbu port later on Tuesday, according to three sources briefed on the matter. Iran can reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade on Iranian ports, a senior Iranian official told Reuters.

Phil Flynn, senior analyst at Price Futures Group, said that 'Saudi Arabia is acting, not waiting.' Hamad Hussain, senior climate and commodities economist at Capital Economics, noted that Iranian comments were a sign that diplomacy efforts could be working. However, Ole Hansen, head of commodity strategy at Saxo Bank, does not see much further downside to oil prices until supplies increase through the Strait of Hormuz.