Trump's statement to Iran combined with a weakening US dollar pushes crude oil to a four-month high.

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As U.S. winter storms disrupt supply and the dollar weakens, new threats from U.S. President Trump against Iran have further fueled oil prices. On Wednesday, international crude oil futures rose further, hitting an intraday high not seen in four months. The cumulative increase this month has exceeded 10%, despite earlier widespread market expectations of oversupply.

According to CCTV News, on Wednesday, January 28 local time, Trump posted on his personal social media platform, Truth Social, stating, “A large fleet is heading to Iran at high speed,” expressing hope that this move would urge Iran “back to the negotiating table,” to “negotiate a fair and reasonable agreement—no nuclear weapons—a deal beneficial to all parties.” Trump also said this fleet is “bigger than the fleet previously sent to Venezuela” and warned that “the next strike on Iran will be even more intense.”

After Trump’s post, international crude oil futures accelerated their climb. Before the U.S. market opened and prices hit new intraday highs, U.S. WTI crude oil futures rose to $63.52, up more than 1.8% on the day. Brent crude rose to $68.53, up more than 1.4% on the day – both reaching the highest intraday levels since late September 2025.

Iran's delegation to the United Nations reiterated on social media platform X that Iran is ready to conduct dialogue on the basis of mutual respect and interests, while also stating it will “defend itself and respond in an unprecedented way” to U.S. aggression. Afterwards, oil prices narrowed their gains. In early U.S. trading, the day’s gains for WTI and Brent both narrowed to less than 1%, but both were on track to rise for the second consecutive day and potentially hit a new closing high for nearly four months.

Risks to Iranian supply have injected a risk premium into oil prices, driving a strong start for futures this year. The near-month spread of the two major benchmark crude oils has expanded this month into a backwardation structure, indicating tightening supplies. On Wednesday, Brent’s near-month spread broke through $1.

Supply interruptions become the main driver; Weak dollar provides additional support

U.S. winter storms have had a tangible impact on crude oil production. According to shipping tracker Vortexa, crude oil exports at U.S. Gulf Coast ports fell to zero on Sunday before rebounding on Monday. The widespread winter storms swept across the country, severely disrupting supply chains.

Production interruptions from OPEC+ member Kazakhstan also supported price increases. Although the country hopes that production at its Tengiz oil field can gradually recover within a week, industry insiders say it may take longer. After a drone attack on a loading point, pipeline operator CPC performed maintenance and has now restored full loading capacity at its Black Sea terminal. The pipeline handles about 80% of Kazakhstan’s oil exports.

Reports on Wednesday stated that OPEC+ representatives revealed that the group, including OPEC, Russia, and other oil producers, would decide at their February 1 meeting whether to continue pausing production increases in March.

The U.S. dollar index has hovered near a four-year low, making dollar-denominated commodities such as oil cheaper for buyers holding other currencies.

The dollar previously rebounded from near a four-year low after U.S. Treasury Secretary Bessent said the U.S., under Trump’s leadership, would continue implementing a “strong dollar” policy and denied any government intervention in forex markets, especially the yen. Although the dollar’s surge once made dollar-denominated commodities less attractive, this effect did not persist in depressing oil prices.

Continued Escalation of Geopolitical Risks

According to CCTV News, on Monday, January 26, U.S. Central Command posted on social media that the U.S. Navy’s USS Abraham Lincoln carrier strike group is “deploying to the Middle East.” U.S. officials told the media that a U.S. carrier and support ships have already arrived in the Middle East, enhancing Trump’s ability to protect U.S. forces or potentially take military action against Iran.

According to Xinhua News Agency, Trump stated on Monday that the situation in Iran remains “in flux,” and he has sent a fleet to the Middle East larger than that deployed to the waters around Venezuela, claiming Iran does indeed want to reach a deal.

Xinhua, citing U.S. media on Monday, said the Abraham Lincoln carrier strike group has entered the U.S. Central Command’s responsibility zone in the western Indian Ocean. If the White House orders strikes against Iran, in theory, the carrier strike group could launch operations within “a day or two.”

Xinhua also reported that on Tuesday in Iowa, Trump said another fleet is heading toward Iran, expressing hope that Iran can reach a deal with the U.S.

CCTV reported that earlier on Wednesday, Iranian Islamic Revolutionary Guard Corps Deputy Commander Vahidi stated that Iran has continuously strengthened comprehensive domestic capability building in recent years, making any action against Iran costly and substantially risky for adversaries.

The Middle East has already responded to Trump's recent signals. The foreign ministers of Iran and Qatar emphasized the need to continue diplomatic efforts to ease tensions, while the Saudi crown prince stated that the country’s territory would not be used for actions against Tehran. Iran is OPEC’s fourth-largest crude producer, and concerns about supply disruptions continue to intensify.

Market Sentiment Shifting

A team of analysts at Standard Chartered, including Emily Ashford, wrote in a report: “Market sentiment appears to be gradually turning more positive as the widely accepted bearish oversupply narrative for the second half of 2025 is receding. We expect volatility to rise, with increasing attention on supply and demand risks.”

The cost of call options remains high relative to puts, reflecting concerns about upside risk. Media surveys show that U.S. crude and gasoline inventories likely increased in the week ending January 23, while distillate inventories may have dropped.

In addition, media learned that U.S. officials are working on a general license, which would lift some sanctions on Venezuela’s energy sector, possibly putting downward pressure on oil prices.

Risk Disclaimer and Liability TermsThe market carries risks, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account individual users’ particular investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investing accordingly is at one’s own risk.

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