Oil spikes as Trump threatens action against Iran

Oil prices spiked Wednesday morning after President Trump threatened action against Iranian gunboats that have been harassing U.S. ships.

West Texas Intermediate crude oil, the U.S. benchmark, gained 19 percent to $13.78 a barrel. WTI was trading at $11.37 ahead of the president's tweet. Brent crude, the international benchmark, was higher by 5.38 percent at $20.37.

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“I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea,” Trump tweeted.

Trump's statement comes after 11 Iranian vessels last week operated dangerously close to U.S. ships in the Persian Gulf. Earlier on Wednesday, Iran said it launched its first military satellite into orbit.

Wednesday’s rebound amid rising geopolitical tensions comes after WTI crude oil for June delivery plunged 60 percent this week amid worries about demand destruction caused by COVID-19 and ballooning supplies due to the price war between Russia and Saudi Arabia.

U.S. stockpiles rose by 15.022 million barrels in the week ended April 17, according to a report from the Energy Information Administration, in line with the 15.15 million barrel build that analysts surveyed by Refinitiv were expecting.

At 518.6 million barrels, inventories are about 9 percent higher than the five-year average for this time of year, the EIA said.

While Trump's comments have provided a short-term lift, they're unlikely to keep prices elevated.

"You can't talk oil prices higher. You can't talk oil prices higher by threatening military action," Stephen Schork, founder and editor of the daily oil subscription newsletter The Schork Report, told FOX Business.

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"The economies have to open up, and they're closed," he added. "And that's the bottom line. So without demand, you're not going to get any sort of meaningful rally in oil."