The Trump administration becomes the "source of volatility," and oil prices take another roller coaster ride

The deleted social media post by the U.S. Energy Secretary and the subsequent chaotic statements from the Trump administration are dragging the global crude oil market into intense volatility.

On Tuesday, U.S. Energy Secretary Chris Wright posted on social media platform X that the U.S. Navy had successfully escorted a tanker through the Strait of Hormuz to ensure oil flows to global markets. This brief message temporarily eased market concerns over long-term energy shocks, causing U.S. benchmark crude futures to plummet nearly 20%.

However, the post was deleted within minutes. The White House later clarified that no such escort operation had taken place but stated that the military was “exploring additional options.” This erratic statement caused the market to quickly reverse, narrowing the decline in oil prices.

“That was an unforgivable mistake,” said Robert Yawger, commodities expert at Mizuho Securities. In the ten minutes the post was live, an exchange-traded fund (ETF) linked to crude futures lost $84 million in market value.

The day before, U.S. oil prices had surged by as much as 31%, but the gains nearly vanished after Trump’s statement that the war was “almost over.”

Amid the market’s high sensitivity to Middle East conflicts, conflicting official messages not only wiped out millions of dollars in trading value but also left investors struggling in the “fog of war,” further amplifying market fragility and volatility.

Chaotic signals intensify oil price swings

After Wright’s post triggered a market shock, Trump’s own social media statements further fueled the chaos.

On Tuesday afternoon, Trump posted multiple messages, first claiming that the U.S. “had no reports of mines,” then urging Iran’s military to clear any possible explosives. He then announced that the U.S. had “hit and completely destroyed 10 inactive mine vessels,” promising “more to come.”

This scattered and contradictory official messaging frustrated Wall Street and Washington observers. Although crude futures rebounded from intraday lows, they still closed down 12% on Tuesday, at $83.45 per barrel, marking the largest single-day decline in four years. The intraday low of $76.73 was a 36% plunge from Sunday night’s high of $119.48, the biggest two-day peak-to-trough drop since the depths of the COVID-19 pandemic in April 2020.

Traders are closely watching every piece of news, with speculators driving sharp price swings across the entire market. As Yawger said, “Where is the line between fantasy and reality? It’s hard to say.”

Michael Rosen, Chief Investment Officer at Angeles Investments, commented, “From a political perspective and in terms of market reactions, there’s a certain randomness to all this.”

Energy giants face “greatest crisis”

As conflict spreads across the Middle East, regional energy giants are pushed to the brink of crisis. Global retail gasoline and diesel prices have soared, becoming a vulnerability in an election year in the U.S., while some Asian governments have restricted fuel use.

The critical Strait of Hormuz remains virtually closed to all traffic. Saudi Arabia, Iraq, the UAE, and Kuwait have all cut production. There is little sign that the Strait could reopen soon without at least a pause in hostilities.

Amin Nasser, CEO of Saudi Aramco, warned during Tuesday’s earnings call that the longer the disruption in energy flows persists, the more “catastrophic consequences for the oil market.” He emphasized, “While we have faced disruptions before, this is definitely the biggest crisis the oil and gas industry in the region has ever faced.”

Additionally, the escalation of conflict has had tangible impacts on other energy infrastructure. Bloomberg reports that the largest refinery in Ruwais, UAE, has suspended operations after a drone attack caused a fire in the industrial zone.

Military escalation and political divisions

Although Trump hinted the day before to CBS News that the war was “very complete, almost over,” U.S. officials on Tuesday signaled that military actions against Iran are escalating, and diplomatic negotiations seem unlikely.

Defense Secretary Pete Hegseth stated at a press conference that the U.S. and Israel are conducting the most intense strikes against Iran to date. “We will not back down until the enemy is thoroughly and decisively defeated,” Hegseth said, “We act on our own timeline and at our chosen moments.”

However, deep partisan divisions are evident in Congress over the war. Democratic Senator Richard Blumenthal, after briefings from Pentagon officials, said the briefing “failed to convince me that we have clear objectives or strategy, or that we have a final game plan.”

As U.S. midterms approach, the Trump administration’s policy options for handling soaring oil prices and military conflict are under immense pressure.

White House Press Secretary Karoline Leavitt stated that the increase in energy costs is temporary and will decline once actions against Iran conclude. However, amid ongoing chaotic official messaging and rising geopolitical risks, investors should remain prepared for continued intense market volatility.

Risk Disclaimer

Market risks are present; invest cautiously. This article does not constitute personal investment advice and does not consider individual user’s specific investment goals, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Investment is at your own risk.