Oil prices surged nearly 7% on Thursday as US President Donald Trump reiterated threats to hit Iran ‘extremely hard’ in the coming weeks, according to the BBC. Brent crude climbed to $108 a barrel, while stock markets in Europe and Asia fell following Trump’s address from the White House.

Trump’s War Rhetoric Sparks Market Volatility

During his speech, Trump said the US would complete its strategic objectives for the war ‘very shortly’ and spend the next two to three weeks bombing Iran ‘back to the Stone Ages.’ The Iran war has severely disrupted global oil and gas supplies, with oil shipments through the critical Strait of Hormuz waterway mostly halted after Iran threatened to attack tankers that try to cross in retaliation to US-Israeli strikes, which began on 28 February.

Trump urged other nations to step in to free up shipments from the Gulf that have been disrupted as a result of the war. He said: ‘To those countries that can’t get fuel, many of which refuse to get involved in the decapitation of Iran… build up some delayed courage, go to the Strait and just take it.’

Oil prices, which had been fluctuating incrementally before, shot upwards moments after the televised speech. West Texas Intermediate oil rose 6.4% to about $106.50 a barrel. Alberto Bellorin from InterCapital Energy said the price rise was a ‘clear market reality check following the earlier optimism for an imminent ceasefire.’

Uncertainty Over Strait of Hormuz Reopening

Trump’s speech lacked a ‘concrete timeline’ for the reopening of the Strait of Hormuz, while a return to normal now looks ‘months away rather than weeks,’ Bellorin added. In urging other nations to step in, Trump has removed hopes that disruptions to global energy supplies will be resolved swiftly, he said.

In his speech, he said oil and gas flows would return quickly when the war ended. ‘When this conflict is over, the strait will open up naturally. It will just open up naturally,’ he said.

However, Anne-Sophie Corbeau, former head of gas analysis at oil giant BP, suggested it could take some time for flows to return to normal. The Gulf’s energy infrastructure has been damaged following strikes by Iran, Israel, and the US, and Corbeau said repairing it could take between three and five years.

Corbeau, who is now at Center on Global Energy Policy at Colombia, told the BBC’s Today programme that disruption to traffic through the Strait of Hormuz was likely to persist and that additional costs in the form of fees to use the strait could be ‘quite substantial.’ She said currently she understood ships were subject to a charge in the region of $2m for using the strait, which, if made permanent, amounted to ‘the worst-case solution’ for users of the waterway.

Global Markets React to Uncertainty

Stock markets in Europe fell. In the UK, the FTSE 100 index opened marginally lower and stayed there in mid-morning trade. France’s Cac fell by 1% and Germany’s Dax extended earlier falls to drop by 2%.

In Asia, major stock indexes fell after Trump’s address, reversing earlier gains. Japan’s Nikkei 225 closed down 2.4% and South Korea’s Kospi ended 4.5% lower. The region’s stock markets have been volatile since the Iran war began. Asia is particularly vulnerable to the impact of the conflict as it is heavily reliant on the Middle East for its energy supplies.

In a separate development, oil prices tumbled and stock markets have rallied across the world after Trump said the war in Iran would end in ‘two to three weeks.’ Brent crude, the international benchmark for oil, fell as low as $98.35 a barrel on Wednesday, down more than 15% on the previous day and its lowest level in a week. It later recovered some ground, ending the day at $102.

Stock markets rallied in Asia, where economies are highly exposed to shortages of oil and gas coming out of the Gulf. Japan’s Nikkei surged up 5%, while the South Korean Kospi jumped by 8%. Hong Kong’s Hang Seng rose by 2% and China’s CSI 300 index was up by 1.7%.

European stock markets followed Asia higher, with the UK’s blue-chip FTSE 100 closing 1.8% higher by the end of trading on Wednesday, marking its biggest one-day gain in almost a year. The Europe Stoxx 600 index, which tracks the biggest companies across the continent, rose by 2.4%.

Trump, talking about the war in Iran, said on Tuesday: ‘Now we’re finishing the job. I think in two weeks or maybe a few days longer, we’ll do the job. We want to knock out everything they’ve got.’

The comments triggered a relief rally in the US stock markets on Tuesday, with the S&P 500 rising by 2.9% at the start of trading and closing 0.72% higher. Emma Wall, the chief investment strategist at the broker Hargreaves Lansdown, said that markets were ‘choosing to believe the optimism from the White House.’