Energy sector tops ASX 200 gains as oil advances on Trump’s threat

The news: The energy sector was the strongest performer on the market index on Thursday, fuelled by oil-related companies as crude prices advanced on an imminent US threat of an attack on Iran.

West Texas Intermediate crude and Brent rose 1.4% and 1.7% respectively.

The context: Trump’s latest comments comes after he warned the US must respond to an attack by Iran that shot down US-marked Apache Helicopters near the Strait of Hormuz. This marked the latest severe escalation in the president’s criticism of Tehran, which he claims is dragging out negotiations to resolve a conflict that has caused the largest oil supply disruption in history.

US government data released on Wednesday (ET) showed that crude inventories fell by 7.2 million barrels last week, according to Bloomberg. Inventories are now hovering at a four-month low, reflecting a severe drawdown in global supplies as energy buyers scramble to replace barrels lost from the blocked Persian Gulf.

What they said: “Oil prices are rising once more as Trump warns Iran has to pay the price for taking too long to negotiate. Against this backdrop, the risks to our crude oil forecast remain tilted to the upside,” StoneX market analyst Fawad Razaqzada said.