Trump's Pledge To Keep Oil Flowing Has Calmed Markets, But Wall Street Experts Say Disruption Risks Aren't Over

• Oil prices steadied after spiking earlier in the week on supply risks sparked by the Iran war.
• Trump offered assurances that the US will keep oil flowing through the Strait of Hormuz.
• His comments calmed jittery markets, but experts warn that disruption risks linger.

Oil prices steadied and US stocks edged up on Wednesday after Donald Trump pledged to keep oil flowing through the Strait of Hormuz. Still, it might not be enough to avoid major disruptions to energy markets, market experts say.

The war in Iran sent oil prices to their highest level in over a year this week, with investors weighing the risk of major energy supply disruptions. Trump said the US is committed to ensuring the free flow of oil in the region during the war. While his pledge seemed to ease some of the market's fears, Wall Street analysts say they're concerned that the situation demands more concrete assurances from the president.

Trump ordered the United States Development Finance Corporation to offer political risk insurance to guarantee the financial security of maritime trade in the Persian Gulf, in a Truth Social post made ahead of Tuesday's market close. Trump also said the US Navy would escort oil tanks through the Strait of Hormuz.

"No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD," Trump posted. His promises seemed to reassure Wall Street.

US Treasury Secretary Scott Bessent told CNBC that Trump's post kicked off "a series of announcements" the administration will make related to protecting oil flows in the Persian Gulf.

Oil price performance in the month prior to March 4

Oil prices dipped on Wednesday for the first time since the war began fell, with Brent edging lower to $81.30 and US crude slipping to $74.50.

Strategists say more assurances are needed

Wall Street strategists suggested that Trump's assurances are a good start, but the president must follow through.

"I suspect that more assurance will be needed — and will be provided — and all eyes will certainly be on the first few ships that traverse the Strait, but we are, forgive the pun, clearly sailing in the right direction," MAI Capital Management's chief market strategist, Chris Grisanti, told Business Insider.

"Ultimately, the admission by the President offers a psychological boost which, at best, helped filtered out some of the noise. The true signal remains—crude has now factored in the assurance and remains higher than where it was before the conflict began. The most materially positive impact will come once a timeline for a ceasefire is evident—it's not there just yet," Mark Malek, the chief investment officer of Siebert Financial, said.

Catalyst Energy Infrastructure Fund portfolio manager Simon Lack shared a similar sentiment, saying that "a truce is really what's needed to restore energy supplies."

Goldman lifts oil price forecast

Goldman Sachs raised its second-quarter average oil price forecast to $76 from $66 on Wednesday, without mentioning Trump's proposal.

"We assume that Brent will trade in the $80s in March as the market processes mixed signals with some relief from a potential gradual recovery in Strait of Hormuz flows but also some renewed concerns as evidence of production cuts grows," they wrote.

The analysts' updated oil price projections underline the importance of the Strait of Hormuz as an oil shipping pathway and the challenges facing Trump's efforts to facilitate the free flow of oil during the conflict.

CEO flags persistent industry worries

Stamatis Tsantanis, CEO of global shipping company Seanergy Maritime and United Maritime, told Business Insider that the maritime industry will likely need further pledges of support from Trump.

"The US commitment to support shipping through naval escorts and insurance backing is a welcome step, but many industry insiders remain cautious," Tsantanis said, adding that ship owners need to see a secure corridor to pass through before confidence returns.

"The priority for the industry is not just moving cargo, but protecting the lives of seafarers, the value of vessels, and avoiding what could become a major environmental disaster if a tanker were seriously hit in such a narrow and sensitive waterway," Tsantanis said.

Top economists react to Trump's promise

Famed economist Mohamed El-Erian raised concerns that, just because the US is offering protection for ships in the Strait of Hormuz, that doesn't mean shipping firms will opt to move cargo through the waterway.

El-Erian said that Trump's promise is "a necessary step," but raised concerns over whether it's sufficient.

"While it helps with the ABILITY to navigate the Strait, there remains the question of ship owners'/operators' WILLINGNESS to do so," the economist wrote.

New Century Advisors' chief economist, Claudia Sahm, reacted to Trump's post as well, quipping that "the federal government is an insurance company with an army."