ABNA24 - Following the US-Israeli aggression on Iran and the consequent disruption of flow of oil through the Strait of Hormuz, the debate of "reality of oil price" against "political narrative-making regarding market conditions" has become one of the key issues of the global economy.
As the crisis unfolds, the US President Donald Trump highlights the transient relief in the raging oil prices after ceasefire or temporary reopening of the Strait of Hormuz in a bid to insinuate that the recent crisis does not have serious and lasting impacts on the energy market, but a more precise look at the market realities demonstrates that not only this narrative of Trump is incorrect, but also it presents a false and misleading image of the current conditions.
In this period, the oil market showed extremely instable and sensitive behavior to the round-the-moment developments. Each time news come about de-escalation or reopening of the oil supply routes, the prices are hasty to drop. But this is not long and as concerns about security of the supply routes grow, the prices rally back.
For instance on April 17 and following announcement by Iran that the strait is opened to navigation, the oil price trend moved downward, with prices dropping over 10 percent all of a sudden, with West Texas Intermediate crude and Brent prices slumping to $84.95 and $90.87 consecutively. This was what Trump and his affiliated media underscored as a sign of controlling the market and of their political success.
But this situation did not remain stable for long. Following Iran’s statement that the Strait of Hormuz would remain closed, prices shot up again. As tensions escalated and uncertainty over negotiations deepened, the market swung back into rally mode. By Thursday (April 23), after air defense systems were activated over Tehran to counter hostile targets, Brent crude surged to $106 a barrel.
According to weekly trading data, Brent prices jumped an estimated 14–17 percent in the third week of April, while West Texas Intermediate saw a gain of nearly 13–15 percent. These numbers show the market has not just turned bullish, volatility has spiked too. On some days, prices moved by several dollars per barrel, a significant swing in energy markets. This pattern makes clear that far from stabilizing, the market remains acutely sensitive to geopolitical risks, where even the slightest political shift can trigger wild price swings.
All this comes after oil had been trading in the $70–$75 range before the strike on Iran. In a matter of weeks, the market has soared 30–40 percent, leaving many analysts dreaming of a return to those earlier levels.
Current high oil prices driven by low output
Another crucial point that is highlighted in the oil market analysis in the view of analysts is the gap and actually imbalance between the true prices of oil trade and the prices that are announced in official markets. So, the oil price ease does not mean true improvement of the market conditions and in many cases these swing-backs are driven by the expectation-reliant psychological reactions of the financial markets and trading, rather than real supply increase or sustainable demand drop. In other words, what is seen in the official markets and price indices does not necessarily reflect the true status of oil accessibility.
On the other hand, new analyses from financial institutions are also contradicting Washington’s narrative. According to a report from J.P. Morgan, the current oil price, around $100 a barrel, is still “below the real level needed” to offset supply shortages, and further price hikes are likely. The report stresses that the apparent drop in demand is actually driven by a physical lack of supply, not improving market conditions. In other words, in some regions, oil simply is not available, not that it is gotten cheaper.
Meanwhile, the disruption in the Strait of Hormuz, one of the world’s most vital energy arteries, has sent shockwaves through global supply chains. Fewer tanker crossings, higher transport risks, and mounting security concerns over the route have all driven up the real cost of moving oil.
These higher costs ultimately show up in final energy prices and get passed on to industries and consumers, even when the headline price of crude appears to fall in global markets. This shows that the crisis is not just squeezing crude prices; it is rippling through the entire cost structure of the energy industry.
Gaps between paper market and real market
This growing chasm between the "paper market" and the "real market" has never been more apparent. While financial markets may see prices dip due to short-term news and psychological expectations, the real market, where physical oil is traded and delivered, tells a completely different story. Supply constraints, rising logistics costs, and heightened security risks have pushed the actual price of oil for many buyers well above the figures reported in official benchmarks.
That gap becomes even more tangible when you look at its impact on consumers. Soaring fuel prices in many countries, especially in the US, where gasoline has jumped from about $2.88 to over $5 a gallon, show that temporary drops in crude prices do not translate directly or immediately into lower costs at the pump. In reality, the energy supply chain from production to end-user is built in a way that cost hikes pass through quickly, but price cuts reach consumers slowly and often only partially.
That is why many energy experts believe that even if stability relatively returns to the region and the strait is fully reopened, the energy market will be sluggish to regain its state of stability. They suggest that mending the damaged supply chains and restoring the confidence to the transit routes will be a time-taking process and so it will take months for the oil and gas prices to return the pre-crisis levels.
Additionally, the energy crisis has now spilled over into other sectors of the economy. Higher energy costs mean higher production costs across industries, from transportation to food manufacturing to basic goods, ultimately driving up the prices of everything. This makes it crystal clear: the oil crisis is not just an energy market problem. It is squeezing the entire global economy.
On a macro level, the International Energy Agency has described the Persian Gulf crisis as the "biggest energy security challenge in history." Such assessments stand in stark contrast to claims that the market remains under control and that the war has little effect on prices. Even if some short-term dips occur, the overall trend points to mounting pressure on energy markets. With existing reserves being drawn down and no quick replacements in sight, this could push prices even higher in the future.
Against this backdrop, emphasizing short-term price drops and painting a picture of market control is less a reflection of reality and more an exercise in public perception management. Statements from figures like Trump may influence market expectations in the short run, but they cannot change the fundamental realities of supply and demand. When major oil transit routes are disrupted and production and distribution costs are rising, no one should expect the market to head into a sustained downward trend.
So, what we are seeing today in the oil market is a mixture of sharp volatilities, shortage of supply, rising costs, and high uncertainty about the energy markets and therefore Trump's claims that the crisis does not influence the prices does not match the reality, and even if in some cases we have price drops, they are psychologically-driven and transient and can by no means signal true market rejuvenation.
At the end, it must be said that such narratives propagated by some American officials at best are working like a sedative. After all, the global consumers will inevitably feel the true inflation, energy price hikes, and growing economic pressures and the rallying prices cannot be swung back or contained by political stances and Back-to-back social media posts of Trump.
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