U.S. Oil Jumps Nearly 12 Percent After Trump Offers No Exit Plan

Oil prices leapt on Thursday after President Trump’s Wednesday-night address on Iran dimmed hopes of a quick end to the war, pushing gasoline higher for drivers and leaving Wall Street unsettled. U.S. crude rose to more than $111 a barrel, up nearly 12 percent from Wednesday, its biggest one-day jump in six years, NBC News reported. Brent, the international benchmark, climbed almost 8 percent to above $109.

Prices had been sliding toward $100 before the speech, according to the Associated Press. They began climbing during the address, reversing two days of declines, NBC News reported. The president said the war would end “shortly” but promised two to three more weeks of heavy strikes, and NBC News noted that he offered neither a ceasefire path nor a plan to reopen the Strait of Hormuz, through which more than a fifth of the world’s oil normally passes. The AP said shipping through the strait has been severely curtailed.

Consumers are feeling it. The national average for regular gasoline hit $4.08 a gallon, according to AAA figures cited by both NBC News and the AP, up from $2.98 before the war began Feb. 28. Diesel reached $5.51, NBC News reported. The AP put the rise in gasoline over the past month at 36 percent.

Stocks swung widely and then settled. The S&P 500 fell as much as 1.5 percent early in the session before recovering, the AP reported. It closed up 0.11 percent, while the Nasdaq rose 0.18 percent and the Dow Jones Industrial Average lost 61 points, NBC News reported. The S&P 500 had come close on Monday to a 10 percent drop from its record, the level investors call a correction, the AP noted, and the major indexes were still on track for a weekly gain, which would be the S&P 500’s first winning week since the war started.

Analysts said the market had hoped for something different. UBS’s Paul Donovan wrote that “markets wanted something different” and warned that American escalation could draw Iranian retaliation and more damage to Gulf infrastructure, according to NBC News. Adam Turnquist of LPL Financial told the AP that a prolonged conflict raises the risk of persistent inflation, slower global growth, higher rates and lower stock valuations.

The energy shock is spreading to borrowing costs and the Federal Reserve’s outlook. Treasury yields have risen from about 3.96 percent on Feb. 27 to about 4.30 percent, and the average 30-year mortgage rate has climbed to 6.41 percent from 5.99 percent before the war, NBC News reported. Bank of America analysts expect the Fed’s preferred inflation gauge to peak near 4 percent this quarter, up from 2.8 percent in January, NBC News said. The AP reported that traders now expect interest rates to stay unchanged this year, ending hopes for cuts that investors had held earlier.

The administration’s argument is that the pain is temporary: Mr. Trump has said the strait will open once the fighting stops. Whether that happens in the two to three weeks he described, or later, is now the main question for energy markets and household budgets alike.