Cramer says Thursday's trading really reflects U.S. energy independence: File Image/Pixabay
Televised images of two oil tankers ablaze in the Gulf of Oman and Iran being fingered as the culprit made for a predictable reaction from the schizophrenic crude market on Thursday: traders who just a day prior worried about a global oil glut and weak demand did an about face and cited supply problems for the reason prices settled 2.2 percent higher.
Brent settled up $1.34, or 2.23 percent, at $61.31 per barrel, while West Texas Intermediate climbed $1.14, or 2.23 percent, to $52.28 per barrel.
But as far as Derek Brower, a director at RS Energy Group, was concerned, Thursday's performance was underwhelming: he remarked, "It's a surprise that the market reaction has been so muted.....for traders, worries about the weakening global oil-demand picture are front of mind and enough to trump real, live geopolitical threats to physical supply."
Derek Brower, director, RS Energy Group
It’s a surprise that the market reaction has been so muted
What remains unclear is if tension between Iran and the U.S. - which usually trigger price upswings - will escalate: Mike Pompeo, the U.S. secretary of state, said his country used intelligence and a calculation of the expertise needed for the attacks on the tankers to conclude that Iran was behind the attacks.
However, as of Thursday evening Washington remained silent about what course of retaliatory action it may take, although last month the Pentagon announced it was sending additional troops, drones, and fighter jets to the Middle East amid increasing tensions between the Washington and Tehran.
John Kilduff, founding partner at Again Capital, pointed out that if nothing else, "This is the second attack in a month's time, [and] it raises the ante for insurance risk."
For its part, Saudi Arabia chose to downplay the significance of the attacks: Khalid al-Falih, energy minister for the kingdom, told media that his ministry and Aramco have increased their readiness to deal with attacks and that both are committed to providing reliable oil supplies to the international market.
Jim Cramer, CNBC Squawk Box television host, was another expert who downplayed the significance of the attacks: he reminded audiences that the U.S. is now the swing producer, saying, "This is a story about our oil independence," and he added that if such attacks in the Middle East had any meaningful impact on fundamentals, then prices on Thursday would have climbed a lot higher.