A defiant statement from Iran’s foreign ministry on April 18, rejecting any “exception” to international law and vowing to “fight to the end,” has injected fresh volatility into global markets, particularly impacting crude oil prices.
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Iran's vow to 'fight to the end' adds 5% to oil risk premium
A hawkish declaration from Iran's Deputy Foreign Minister on April 18 that the nation would "fight to the end" if invaded has sent a tremor through global markets, pushing Brent crude futures up 2.5% and adding an estimated 5% to the geopolitical risk premium on oil.
"Iran is committed to resolving issues through diplomatic channels, but will never accept being treated as an 'exception' to international law," Saeed Khatibzadeh, the Deputy Foreign Minister, said in a statement reported by state media.
The comments sparked an immediate flight to safety, with the CBOE Volatility Index (VIX) jumping 10% to 19.5. In currency markets, the Japanese Yen strengthened 0.8% against the dollar, while the S&P 500 dipped 0.6% in early trading before recovering slightly. The most direct impact was felt in energy markets, where Brent crude for June delivery settled at $92.10 a barrel, its highest close in over a week.
The rhetoric escalates tensions in a region responsible for over 20% of global oil supply, forcing traders to price in a higher probability of supply disruptions. The last time Iran issued a similar direct military threat in January 2020, after the killing of General Qassem Soleimani, Brent crude surged more than 4% in a single day, highlighting the market's sensitivity to conflict in the Strait of Hormuz.
This article is for informational purposes only and does not constitute investment advice.
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