G7 Pushes Back on Russian Oil Waiver
German Chancellor Friedrich Merz did not like the decision, saying the move to ease Russian sanctions was wrong. His Economy Minister Katherina Reiche thought the decision was probably the result of U.S. domestic pressure, according to Reuters. In making his decision, Trump went against the wishes of the six members of the G7. Merz believes that Europe is well supplied at this time, emphasizing that the oil market currently has a price problem, not a quantity problem. Norway, France and the European Commission all disagreed with the move.
Throwing supply at the market is not expected to have too much of an impact on overall prices even with the International Energy Agency calling the war in the Middle East, the biggest oil supply disruption in history.
Trump’s Confidence Is Waning
Despite Brent crude oil, the global benchmark, hovering near $100 on Friday morning, the Trump administration continued to push its positive outlook although it’s been pretty clear since mid-week that the confidence in its remarks is waning. Some of the comments are creating more uncertainty although they are spun to sound optimistic.
Earlier in the week, President Trump said he thought that the U.S. offensive against Iran was ahead of schedule and that the war would end sooner-than-expected. However, overnight Trump did not sound so confident, hinting that the end to the conflict was not imminent. At the same time, Axios reported that Trump had told G7 leaders that Iran was “about to surrender.” But this was just one day after Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting.
Traders Focused on the Strait, Not the Spin
This week’s price action suggests that traders are more focused on the closure of the Strait of Hormuz and its impact on global supply than the political comments. Trump’s tone is not as confident as it was earlier in the week although he continues to downplay the negative, in my opinion. Even Defense Secretary Pete Hegseth surprised traders by dismissing concerns about the closure of the Strait, saying we “don’t need to worry about it.”
